Japanese luxury brands are selling poorly in China, how long can Lexus last?

Mondo Cars Updated on 2024-02-01

Ten years ago, it was the moment when Infiniti was most well-known in the Chinese market. However, over the past decade, Infiniti has not been able to continue this success and has gradually lost market share. Like Infiniti, luxury brands Acura and Lexus, which are also from Japan, are in a similar situation. Although Infiniti has not yet ushered in a new spring after half a year of the launch of its global brand renewal program.

Recently** reports pointed out that the inventory backlog of Infiniti brand models in the Chinese market is very serious, and even if the discount of 6% off sales is still difficult to boost sales. Although the relevant person in charge of Infiniti emphasized that the brand will not withdraw from the Chinese market, other brands such as Acura and Mitsubishi have also denied the news of withdrawing from the market and finally chose to withdraw, so there is still a certain degree of uncertainty about the future of Infiniti.

At the end of 2022, due to the continued sluggish sales, Honda's Japanese luxury brand Acura officially announced its withdrawal from the Chinese market, closing its official website and official WeChat*** to end its operations in China. At the same time, in 2023, GAC Mitsubishi also announced the suspension of production and made an equity adjustment, becoming the first Japanese joint venture to withdraw from the market amid the wave of electrification.

In addition, starting from 2022, Lexus, the only high-profile brand among Japanese luxury brands, is also facing a continuous decline in sales, once with annual sales of more than 220,000 units in the Chinese market, ranking first among second-tier luxury brands, but it has not been able to stop the decline and rebound.

In recent years, the competition in China's auto market has become more and more fierce, with the rise of new car manufacturers and traditional brands struggling to break through, but the three major Japanese luxury brands have experienced defeat in the Chinese market.

Infiniti's sales in the Chinese market have declined for a while, from a peak annual sales volume in 2017 to a low point in 2022. However, in order to change this, Infiniti underwent a brand refresh in 2023, unveiling a new brand identity and planning to transform the brand into an electric era through design, product and technology upgrades.

Recently, Infiniti unveiled its all-new QX Monograph concept car in China, which is considered to be a forward-looking demonstration of Infiniti's flagship model, the QX80. In addition, Infiniti plans to introduce three other all-new models, including the QX65 crossover coupe, the Vision QE fastback concept and an all-electric SUV. These new models mark the beginning of a new era for Infiniti and lay the foundation for the electrification of the world's major vehicle models by 2030.

However, in the Chinese market, Infiniti faces some challenges. For example, the QX80 sells for more than a million dollars, which may limit its sales growth. In addition, there are many models similar to the QX80 on the market, and Chinese car brands have also begun to enter this segment to meet consumer demand for intelligence. As a result, Infiniti needs to respond to competitive pressures by constantly innovating and increasing localization.

In addition, Infiniti has been relatively slow in updating its products in recent years, which is also an obstacle that it is difficult to break through. At the same time, technological innovation and localization of brand concepts also need to be strengthened to better cater to the needs of Chinese consumers. By accelerating the process of product renewal, technological innovation and localization, Infiniti is expected to revitalize the brand and achieve greater success in the Chinese market.

In 2018, Lu Yi, then General Manager of Dongfeng Infiniti and General Manager of Infiniti China, released Infiniti's "5 in 5" strategy, planning to launch five new domestically produced new cars in the next five years and build an industry-leading localized product matrix. However, in the past five years, Infiniti has only succeeded in launching one new domestic car, and the construction of a localized product matrix has almost stopped at slogans.

At the same time, during this time, Infiniti's leadership also changed five times until May 2023, when Xin Yu, the former general manager of Dongfeng Nissan Motor Sales Company, took over as general manager. This also means that Infiniti has been downgraded from an independent business unit to the third brand under Dongfeng Nissan, and the management team will be taken over by the former senior executives of Dongfeng Nissan.

In the context of the rapid development of China's local brands and new energy market, Infiniti has gradually lost market share. To this day, Infiniti has struggled to stay on the margins of the market.

After being incorporated into the management system of Dongfeng Nissan in 2023, Infiniti once again tried to redeem itself. However, unlike other luxury brands that have invested heavily in construction, Infiniti's brand renewal plans have been limited, and the launch time of electrified products is uncertain.

Despite this, Infiniti still insists that it will always be rooted in the Chinese market and deeply cultivate the Chinese market, both in the past and in the future. However, in order to enhance the brand's influence and market competitiveness, Infiniti needs to take more proactive measures.

In recent years, not only has Infiniti's development in the Chinese market suffered setbacks, but from 2022, the Japanese luxury brand Lexus has also fallen into a downward trend, and GAC Acura has even withdrawn from the Chinese market.

After GAC Acura was localized in 2016, only two SUV models, CDX and RDX, were on sale, and the product system was single, making it difficult to cope with fierce market competition. Similar to Infiniti, after Infiniti was localized in 2014, as of the end of 2021, only two domestic models of Q50L and QX50 were on sale, and the third domestic model, QX60, was not launched until 2022, which is obviously not optimistic.

Lexus, as the only luxury brand that has been selling imported cars, has been stable or even increased in price before. But in the past two years, imported car brands such as Lexus and Porsche have begun to decline.

In addition, second-tier luxury brands face some challenges in the Chinese market. They entered the Chinese market relatively late, their brand awareness and influence are relatively weak, and their product lines are relatively single compared to first-tier luxury brands, which cannot meet the diverse needs of consumers. In addition, Japanese brands have always been known for their cost performance, and although there is a certain guarantee in product quality, the establishment of a luxury brand image is relatively insufficient.

In addition, with the rise of electrification, major luxury brands are actively introducing electric models, while second-tier luxury brands are making relatively slow progress in electrification. They lack competitive BEV models and are at a disadvantage in the EV market.

Entering 2024, it has become an industry consensus that the first-class battle and knockout will be further intensified. There may be a number of new power brands and traditional brands that fall again this year, and although Lexus still has high annual sales after a decline in 2023, Infiniti seems to have no room and time to continue to lose. Second-tier luxury brands need to accelerate the pace of product innovation and market expansion to improve their competitiveness and compete with fierce market competition.

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