Japan's unlikely rise to luxury car dominance

The new Acura Integra will be released at a starting price of about $32,000. PHOTO: NYTIMES

JAPAN (NYTIMES) - Out of the ashes of World War II, the Japanese for a time turned out trinket cars: miniature mobile contraptions that did little to dignify the phrase, "Made in Japan".

Toyota in 1950 was on the brink of bankruptcy. Honda turned to motorcycles after developing aircraft propellers for the Imperial Japanese Navy and, in the early 1960s, unveiled the T360, a pocket-size pickup with a 30-horsepower engine.

More than 100,000 of these were made. All were painted blue.

Japanese cars did not define luxury then, but in the more than half a century since, that has changed.

Now, it is difficult to imagine the high-end American car market without models such as Acura, Infiniti and Lexus - all of which Japan introduced to the United States in the 1980s.

These models have raised expectations for luxury vehicles, from how the car should look to what the experience should be like when you buy one.

The Japanese, not known for shifting manufacturing gears too quickly, were fast in building sport utility vehicles (SUVs). Toyota, the parent of Lexus, is now the largest carmaker in the world, with more than 2.3 million vehicles sold last year in the US.

Toyota and Honda consistently sell the most SUVs around the world, with Nissan not far down the list.

In the US, Lexus is outsold only by BMW and Tesla among luxury brands.

And when the new Acura Integra is unveiled early this month at a starting price of about US$32,000 (S$44,030), it will partly be targeting a market of younger, more affluent driving enthusiasts - buyers who will amplify Acura's aim to deliver a sexy, "fun to drive" element into its range of models sold in North America.

Japan did not begin a serious push to establish its presence in US markets until the 1980s, largely through consumer technology.

Sony's advances left the American consumer electronics industry far behind. Think compact disc, Betamax, the Walkman and the video cassette recorder.

Remember the laserdisc? It set the stage for the DVD. Panasonic had corralled part of the television market. Pioneer and Mitsubishi wanted in on the fun. Samsung, in South Korea, was not even a blip on the horizon.

"Japan Inc" was going great guns. All this gave Mr Eiji Toyoda, a member of Toyota Motor's founding family, an idea. He called his concept sedan the Project F1 (F for flagship).

His motivation: Beat the Germans. Beat the Americans. Beat everyone.

The crystallisation of his idea would be the Lexus.

Elsewhere in Japan, from 1983 until the debut of the Lexus LS400 six years later, Honda was making more than motorcycles and Civics. Its newly named Acura division, code-named Channel II, and its models - the Legend and Integra, destined only for America - were already for sale by 1986.

And Nissan, with its Infiniti spin-off, was just three years behind.

"In 1945, Japan was decimated," said Mr Jon Ikeda, vice-president and brand officer of Acura. "And then in 1964, they were showing the bullet train and hosting the Olympics."

But in just two decades, "you're talking an all-aluminium-body NSX, and Honda is winning Formula 1 races", he added. "Acura got caught up in that energy. We wanted to show the world that Japan could build amazing products."

One significant factor that aided the new nameplates was a 1981 voluntary trade agreement that limited Japanese automobile imports to the US.

The restrictions on imports, which stretched into the early 1990s, and the subsequent loss of sales motivated the Japanese to create higher-priced vehicles to boost their profits.

Toyota was pumping, in the 1980s, US$1 billion into Project F1 and assembling 3,700 of its top engineers. There would be a 4-liter V8. It would run as quiet as a... well, Mercedes. It would cost US$40,000. (Instant car buyer reaction: "US$40,000 for a Japanese car?")

In the wings waited the all-aluminium Acura NSX two-seater. At US$65,000, it was the most expensive Japanese car then.

It was a stunning example of engineering: aluminium suspension, four-channel anti-blocking system brakes, 270-horsepower mid-engine V6 with variable valve timing, as in Vtec.

And then there was Nissan. Infiniti launched in 1989 with two cars: the M30, a dated coupe, and the first-generation Q45. Both cars were already several years old when they arrived in the US.

Some reviewers compared the interiors to Japanese tapestries, and what did not help dispel that notion was an advertising campaign that featured rocks and flowers, but no car. As one comedian noted, Infiniti sales were little changed, but rocks and trees were selling nicely.

But subsequent vehicles - like the G35 sports sedan and the FX crossover, both from 2003 - established Infiniti's engineering chops and proved popular with enthusiasts. "Made in Japan" began to mean something different.

"The three big Japanese automakers developed premium brands because they believed they could compete in the US market on quality, performance and the dealership experience," said Mr Bill Howard, an automotive analyst in New Jersey.

Crunching some sales numbers, he found that BMW, Mercedes and Lexus each finished 2021 with about 330,000 sales in the US.

"They have been the top three since 2006," he said. "The other major premium brands - Audi, Acura, Cadillac, Lincoln and Infiniti, in descending order of sales - each sold fewer than 200,000 cars last year."

But those carmakers are not standing still.

"Lincoln has moved to an all-SUV line-up," Mr Howard added. "Lincoln and Infiniti are working to attract women buyers. Infiniti is using former ESPN reporter Erin Andrews as a spokesman."

It is a given that high-end vehicles usually translate to high-end profits. And to reach those well-heeled buyers, Lexus and the other brands not only pioneered a new kind of premium, but they also reinvented the customer experience.

Remember when the best a "luxury" car showroom could offer was a lukewarm cup of Maxwell House? Lexus served cappuccino with the perfect crema.

Chronicling the customer overhaul in a Car and Driver article, John Pearley Huffman wrote that service was Lexus' way "to overcome its lack of heritage".

He added "Lexus' senior technicians became 'diagnostic specialists'. They wore clean white shirts and were expected to explain directly to customers what was going on with their cars. It changed the industry".

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