Remember the days when Detroit regarded all Japanese automakers as one invasive monolith, indistinguishable one from another, all pursuing a similar strategy of selling affordable and reliable econoboxes to a fickle generation of baby boomers?
Amid the continuing boom of the U.S. automotive market, now in its fifth year, the evidence is mounting thatand are pulling away from the rest of the Asian pack in this market. With the exception of Subaru, all the other Japanese manufacturers stumbled in this market last year.
Although some of these smaller Asian manufacturers showed some recovery in the first quarter, withdivision actually posting a decline, this change has been driven more by the timing of marketing programs and fleet sales than any substantive change in the trend line.
This is happening despite the astoundingly robust American economy and currency relationships - a weak Japanese yen versus a strong U.S. dollar - that tempt all Japanese automakers to import more vehicles from Japan to the U.S.
Motor Corp. estimates it lost about $55 million from its U.S. operations in fiscal 1997. Standard & Poor's has downgraded Nissan's debt rating to just one category above junk bonds.
Why the disparity among Japanese automakers on this side of the Pacific? First, many of these second-tier brands such as, and have a majority of their product lines in market segments that are not performing well, such as small cars, while they are late with product entries for the fastest-growing market segments such as large and luxury sport/utility vehicles.
But the problem runs deeper than that. Quite bluntly, many Japanese manufacturers, again with the exception of Subaru, have failed to establish a clear brand identity. For most of the late 1980s and early 1990s they got by on the strength of their vehicles' quality. That's no longer enough.
Unfortunately, the secondary Japanese makers find themselves chasing the same customers Toyota andusually capture, but with products that don't stand out enough from the two dominant players.
Although their products are just as good as Honda and Toyota, the market does not deem them to be. If price is the same, buyers will always go to the more prominent brands. This means that the only way the smaller Japanese manufacturers can compete with Toyota and Honda is through much larger incentives or lower prices, both of which impede profitability. The only way to get around this is for the second-tier Japanese manufacturers to develop a clear and coherent brand image that is perceived as being unique from the competition and of value to the marketplace.
Advertising alone won't solve this problem. Look at Nissan's "Enjoy the Ride" campaign, featuring a diverse cast of entertaining characters ranging from animated Barbie and Ken figures to dogs guiding a sleeping master sliding down a San Francisco street while lounging on a recliner.
They're clever, creative and memorable, but they simply failed to establish the Nissan image in the minds of viewers.
Although Nissan has been in the U.S. for as long as Toyota, its 1984 name change from Datsun destroyed any brand equity that it had built up over the previous two decades.
Advertising is an inadequate substitute for strategic product development. There are plenty of untapped opportunities for products that meet a need the dominant brand names haven't yet satisfied.is redefining the small-car market with the Beetle. Not only will it achieve VW's stated annual sales target of 50,000, but more significantly, it will bring future buyers' attention to VW's other models such as the Golf or Passat, that might get lost in the clutter of their segments without the revived branding impact of the New Beetle.
Subaru's decision to focus on an all-wheel-drive strategy with vehicles that are seen as alternatives to bulkier, costlier sport/utilities reinvigorated a brand that was foundering a few short years ago.
When Subaru tried to expand into a full-line manufacturer in the late 1980s, the strategy failed because it wasn't offering anything customers couldn't find at the Toyota or Honda dealership.
Creating new products aimed at new niches is always risky, but it may be less of a gamble than staying the "me-too" course with products that look like a more generic version of what the dominant competitors are offering.
Our research has found that the next new generation of car buyers, those between the ages of 16 and 21 today, are seeking innovative vehicles that look considerably different from what their parents and even Generation Xers are driving today.
Those manufacturers, be they Asian, American or European, that are willing to take a chance on new body styles and interior packaging that resonate with this future consumer group, may well be the dominant players of the next decade.
In the end, product - much more than advertising - creates and drives brand image. - Chris Cedergren is managing director of Nextrend - headquartered in Thousand Oaks, CA.