) around in two years, transforming the once floundering Japanese group into the industry's most profitable carmaker after Porsche. But Ghosn (nickname: le cost-killer) needs new worlds to conquer. On Nov. 29, he flew to Nissan's Sunderland (England) plant as the first updated Micra minicar rolled off the assembly line. There he declared his new goal: boosting Nissan's car sales in Europe 20% by 2005. "We know it's extremely competitive, but Nissan is committed to the European market," Ghosn says.
Japan vs. Europe. It has long been heralded as the last great showdown in the car industry--an all-out assault by the Japanese on Europe, a rich territory jealously guarded by the local champions, who make most of the 15 million cars sold annually. So far, the Japanese have pushed their total share in Europe to just 11.5%--far below the 30% they command in the U.S. They can't even use quotas as an excuse for their performance--restrictions on Japanese car imports to Western Europe were lifted in 2000. True, a steady drop in the value of the euro against the yen until this year also hurt. But European drivers have long found the styling of Japanese cars dull, the handling mushy, and the interiors plasticky. The Japanese also were unprepared for a surge in demand for fuel-efficient, diesel-powered cars.
But the Japanese refuse to give up. Equipped with stylish new models, diesel engines, and local partners, they're mounting a fresh challenge to Europe's auto makers. Take Toyota Motor Corp.'s (TM
) $9,290 Yaris subcompact, which has won rave reviews for its quirky styling, ample headroom, and short turning radius for exiting tight parking spaces. The car originally debuted as the Vitz model in Japan back in 1999. But it was designed in Toyota's European studio by a young, Greek-born designer named Sotiris Kovos, who formerly worked for France's PSA Peugeot Citro?n. Toyota vehicles "have features the Europeans are copying, such as the elevated position of the seats in the Yaris that improve visibility, and all the interior storage spaces that women particularly like," says Peter Hudders, general manager of the Toyota City dealership in Brussels.
Nissan is pinning its European hopes on a small car, too--the Micra, which is built on a chassis the company will share with Renault, Nissan's leading shareholder. The new Micra offers better handling and rear seats that slide to offer more trunk space or legroom, and will be priced slightly lower than the current model, which starts at $11,530. Ghosn plans to be selling 580,000 Nissan vehicles in Europe by 2005, up from around 470,000 this year.
Toyota's ambitions are even bigger. It wants to boost sales to about 1.2 million units from this year's 800,000, giving it Europewide share on a par with the local powerhouses outside their home market. "I want us to become one of the [major] players, [with] say, 7% or 8% of the European market," says Tokuichi Uranishi, Toyota's managing director for Europe and Africa. This year, Toyota's sales have grown 14% in the European market, which is down 4% overall.
Higher sales are boosting bottom lines for the Japanese after years of losses in Europe. Toyota had a $45 million profit in Europe for the six months ended Sept. 30, the first half-year profit since 1999, on $6.2 billion in sales. Nissan earned $5.8 million on revenues of $3.9 billion. Third-ranked Honda Motor Co. (HMC
) also is making a comeback. After losing European market share for four consecutive years, it has rolled out two hits, a new Civic hatchback and the Jazz subcompact. Its sales in Europe are up 17%.
The next step for the Japanese will be to blunt a European counterattack. Volkswagen (VLKAY
) will roll out a new Golf in 2003, and this new version of the compact is expected to rack up huge gains. But by the time VW's new Golf is on the road, the Japanese makers will be exploiting their European connections more aggressively than ever. Next year, Mazda, a subsidiary of Ford Motor Co. (F
), will produce a subcompact at Ford's plant in Valencia, Spain. Mitsubishi has teamed up with the Smart Div. of its German partner DaimlerChrysler (DCX
) to develop a four-seater minicar. The local heavyweights aren't panicking over the Japa-nese. But they're keeping a close watch on the rearview mirror. By Christine Tierney in Frankfurt and Chester Dawson in Tokyo