To Infiniti and Beyond: Nissan Finally Launches its Premium Brand in Japan

New passenger car registrations have essentially been declining in Japan since 1990 but premium brands have been steadily gaining in volume and thus also share, capturing 4.3% of the market in 2012. Premium cars actually had a higher market share in 2011 but this was of course artificially inflated as foreign brands dominate the premium segment and, unlike the indigenous carmakers, their supply was not significantly constrained by the devastating earthquake and tsunami in March 2011. Given the rising demand for premium cars in a car market that is declining, it is rather surprising that Toyota’s upscale brand, Lexus, was not introduced to Japan until 2005 – a staggering 16 years after its launch in the US. Nevertheless, this pales into insignificance compared to the 24 years that it has taken Nissan to finally launch its Infiniti premium brand in Japan.

New Registrations of Premium-Brand Passenger Cars in Japan, 1998-2012

Source: JATO Dynamics

Lexus has clearly made a positive net contribution to premium car sales in Japan but it is worth remembering that cars that were offered as Lexus models in international markets previously formed part of the Toyota range in Japan – the Altezza, Aristo and Celsior were the Lexus IS, GS and LS, respectively. However, Toyota must be satisfied with its decision to introduce Lexus at home, where it has been the best-selling premium brand since 2010. In fact, with the introduction of the CT200h compact hybrid, Lexus managed not only to retain the premium crown in 2011, but even increased sales whilst demand for all other Japanese brands plummeted due to production stoppages.

Data from the Japan Automobile Manufacturers Association, JAMA, reveal that Lexus is bucking the trend again in 2013, with sales volume of the brand climbing by 2% over January-September compared to the same period in 2012, whereas passenger car sales overall have declined by 5%. This alone would explain why Nissan has at last followed suit and, according to a Bloomberg article on 12 November, “will start selling Infiniti cars in Japan for the first time, 24 years after the luxury brand was born in the US, as it takes on high-end models from automakers including Daimler AG’s Mercedes-Benz”.

Aside from the competitive angle, however, there is also a demographic one in Japan, whereby the mean age of the population is already 45 in 2013 and is expected to climb to 47 by 2020. Coincidentally, this sits exactly in the middle of the 45-49 year age band that is forecast the highest gross income in Japan in 2020. It therefore seems inevitable that demand for premium cars will continue to outpace the overall passenger car market, supporting the case for Infiniti. Beyond Infiniti, I wonder how long it will take before Honda revisits launching its Acura premium brand in Japan, which is incidentally even older than Lexus and Infiniti, dating back 27 years to 1986.