Fiat Chrysler Automobiles revs up Japan's imported car market

In recent years, there has been a renewed interest in Japan in foreign cars which have become more affordable. One of the biggest foreign car importers is Fiat Chrysler Automobiles (FCA) Japan Ltd, which handles five Italian and U.S. brands (Alfa Romeo, Chrysler, Fiat, Jeep and Abarth). Last year, FCA sold about 17,000 units and this year’s target is 20,000, says Pontus Häggström, CEO & President of FCA Japan Ltd.

Häggström, who is from Sweden, has spent most of his working life in the auto industry, including 15 years in Japan. He is optimistic about the Japanese market and says the key to success for FCA is to make the five brands more familiar to even more customers in Japan.

Japan Today visits Häggström at the FCA offices in Tokyo’s Minato Ward to hear more about the industry.

How far back does your involvement with Japan go?

I first came here in 1989 on a six-month internship with Volvo. Now I am on my fifth posting to Japan. I came back to Japan with Fiat eight years ago. FCA Japan was established in January 2015 as a merger between our Fiat and Chrysler sales companies and is now the biggest non-German auto importer in Japan.

Is the pie for imported cars getting bigger in Japan?

It has been getting a little bit bigger over the last 5-6 years. There definitely has been a renewed interest in foreign cars. They are more affordable now, like our Fiat, for example. There has also been a more concerted effort by foreign players to adapt to local market requirements, so you’re seeing all our Jeeps offered only with right-hand drive.

How well known are your brands in Japan?

I think each of our five brands have unique characteristics. They are a lifestyle choice and represent the passion and enthusiasm for driving that are found in Italy and the U.S.

How have sales been so far this year?

Sales for the first six months this year are up by about 15%. We sold 10,000 cars in the first half and hope to reach 20,000 by the year-end. Last year, we sold about 17,000 cars. Our best seller is Fiat; sales are up about 30% this year. Jeep is up about 20%. Abarth, our niche sports car, is also up. There has been a slight decline in Alfa Romeo, partly because we have not had a broad enough product range in recent years to satisfy the many fans in Japan. However, we are bringing the first in a new family of Alfa Romeos to the market from next year. There is still a huge passion and loyalty in Japan for Alfa Romeo; many of the big collectors can be found in Japan and classic car races are laced with Alfas.

How do you market the various brands?

We have different marketing strategies and sales teams for different target groups. We are one of the sponsors of the Fuji Rock Festival with Jeep. That is a perfect event for Jeep. It’s always very cool to be there. Recently, we were the main sponsor of the LGBT Film Festival in Tokyo with Alfa Romeo.

Overall, we’ve shifted from print to digital media for all the brands. Digital platforms give us the exposure we need as consumer behavior changes. We’re very proud of our social network presence. Our engagement ratio on Facebook is among the highest of any brand in Japan. That means that people are interested in a dialogue with us.

How do you get feedback from buyers?

Mainly through dealers and through our call center. Our online presence is also a growing source of feedback.

How knowledgeable are Japanese consumers?

In Japan, people are highly inquisitive. They are looking for stories, facts and background information about cars, so our sales staff have to be very knowledgeable, too. Consumers demand a lot. We are celebrating 75 years with Jeep this year and we celebrated 105 years with Alfa, so we have a long legacy and history. The story about our Abarth sports car is a good example. The founder was born in November, so he is a Scorpio, hence the Scorpion logo on the car. That intrigues Japanese consumers who look for and appreciate authenticity.

What are your customer demographics?

With Fiat, 50% of buyers are women. That’s the highest share of female ownership of any car brand in Japan. With Jeep, what stands out is that we have the youngest demographic among foreign brands, people in their mid-30s on average. Of those, 20% are women. The iconic Wrangler has a particularly young demographic, people in their 20s. The Renegade Black is doing well right now, but it’s a limited edition. Alfa Romeo buyers are mainly middle-aged men looking for style and performance.

How come foreign auto companies don’t release new models as often as Japanese companies?

Traditionally, we have a 5-6 year cycle for cars with a facelift maybe every two or three years. The difference is that the top Japanese makers have 50 different models, so every year they upgrade a certain number. It’s done to stimulate people to consume. They have to drum up demand. One way to do that is to keep throwing new things at the market. It’s the same with cell phones. Every six months, they are upgraded and there are always limited editions, and so on.

When we release new cars, we do big events. On Aug 5, we will launch the new Abarth Spider at a mini motor show at Makuhari Messe that combines classic and new cars. We will show the lineage from the old classic Spider to the new Spider.

Are limited editions popular?

Yes, they are. Japanese consumers like to be different and one reason they choose a foreign car is to make a statement of individuality. We work a lot with limited editions and the Fiat 500 is a good example. Last year, we had 14 limited editions, typically based around different color combinations and other features. Other models, like the Alfa Romeo 4C, which is our 8 million yen two-seat Roadster, are almost 100% custom-made where buyers choose the color of the interior and so on. In November, for Abarth, we will do a program called Build Your Own Scorpion where we make all the options available for a limited period of time. Last time, 60 people signed up for a truly personal car.

Tell us about your dealer network.

Because we have five brands, we have over 200 franchise outlets. We are one of the largest foreign players in that sense. We sell our cars through three channels. Our Chrysler and Jeep vehicles are sold through one network where we have about 80 dealers and we are growing that network. Then we sell Fiat and Alfa Romeo together as we have historically done. When we brought Abarth to the Japanese market in 2009, we started with four dealers and then went to 25. Since July 1, Abarth has been available in all the Fiat stores. Next, we plan to create an exclusive Alfa Romeo network.

How many staff do you have?

We have 100-plus here but a couple of thousand people working for us in our extended family of dealers. Even though we don’t own any dealerships, we truly regard dealers as part of our family, so interaction with them is very important and I will spend maybe 25% of my time visiting them. That’s where you hear what is happening, meet customers and talk to salesmen. We work with them on marketing plans, new products and customer satisfaction initiatives.

What are some regulatory issues you still face?

Non-trade barriers — some legislation is still unique to Japan. Even if a car is certified in Europe, we still have to do the same amount of work to satisfy slightly different criteria for Japan. We’re always lobbying to align more with the U.S. and Europe to make import procedures easier.

Are you optimistic about the economy in Japan?

I am positive about our company’s outlook. There are still many Japanese people who don’t know what a Fiat or a Jeep is, so as long as we can keep expanding the awareness of our brands, we have room to grow.

What areas of the business are you hands-on?

What I get into quite a bit are product and dealer network issues. They are strategically important and have the highest impact on our mid- to long-term ability to grow. It’s all about adding value. Our motto is that we want to add flavor and color to the automotive culture in Japan by bringing cool cars into the market. If I think I can add value at a meeting, I will get myself involved. I don’t get isolated and out of touch because I have been here so long and speak Japanese. This can otherwise be a challenge for foreign company leaders in Japan.

What are you driving these days?

I currently drive a Jeep Grand Cherokee but I am fortunate enough to try different cars. We have a large PR fleet of cars. I try to rotate so I get a feel for all the products. Next I’ll drive our all-new Abarth 124 Spider.

How do you like to spend your time off?

My family and I like to travel. We also like to ski and snowboard; it’s a great outdoors activity that the family can do together and Japan is outstanding for it, Hokkaido in particular.

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