Foreign Automakers Give Up on Japan

Even a new $375,000 Lexus doesn't liven up a recession-battered Tokyo Motor Show. Is it no longer the most important auto show in Asia?

The LF-A supercar revealed for the first time on Oct. 2, 2009.

By Ian Rowley

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Toyota (TM) chief Akio Toyoda did his best to liven up proceedings, but even the unveiling of a $375,000 Lexus supercar couldn't help this year's Tokyo Motor Show capture the excitement of recent years. Toyoda helped develop the Lexus LFA, capable of going 325 kmh (200 mph), and when he unveiled it at the show's opening day on Oct. 21, he said he hoped visitors to the biennial event "can leave feeling that automobiles are exciting and will want to come again."

On day one, though, there were visibly fewer attendees than in 2007 when the Nissan GT-R, another very fast car, was the star. Indeed, while Toyota also unveiled the exciting FT-86, an affordable sports car due for release in 2011, and other automakers showed off a host of intriguing hybrids and electric vehicles, the absence of all major international carmakers—and even two Japanese truckmakers, Hino (7205.T) and Isuzu (7202.T)—confirmed long-held fears that Tokyo's motor show is no longer the most important in Asia. After all, automakers from more than 20 countries braved the recession to attend the Shanghai auto show in April. In Tokyo, only three foreign automakers—Group Lotus and Caterham Cars from Britain and Alpina Burkard Bovensiepen from Germany—could be bothered to show up.

Of course, the stay-away carmakers blame the global recession and plunging auto sales. Many companies, after all, made the decision not to attend when auto sales globally were reaching a nadir earlier this year. And Tokyo, say analysts, is an expensive show, even by international standards. Toyota, for instance, may have spent as much as $100 million in some years preparing concept cars, advertising, and other expenses for the Tokyo show, reckons Tatsuo Yoshida, an analyst at UBS (UBS) in Tokyo. Japanese rivals less reliant on the domestic market spend less but still significant sums. Nissan (NSANY), for example, may have spent $50 million in peak years, Yoshida reckons. "The concept car projects are money eaters," he says.

Perhaps the bigger question, though, is whether the Tokyo show—which, since its inception in the 1950s as the All Japan Motor Show, has carved out a reputation as a place to show technologically advanced concept cars—will ever get its mojo back.

Little International Presence

The outlook doesn't appear promising. This year, China will overtake the U.S. as the world's biggest auto market, a title it may never lose. Meanwhile, having dropped out this year, international automakers, most of which have a tiny presence in Japan, may feel there is no need to return to Tokyo at the next show in 2011.

Few could blame them. For most foreign brands, Japan remains one of the toughest markets on earth to sell cars. In the fiscal year through March 2009, just 3% of sales in Japan were accounted for by foreign carmakers. Partly because of the recession, that's down from 5% just a few years ago.

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