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Japanese carmakers stumbling

The Hyundai i45 is a Camry done better and, like the Kizashi, one of the stars of 2010.

After leading the world on so many fronts - from quality to comfort and reliability - they have been hit badly by the global financial crisis.  Toyota and Honda and many of the others wound back dramatically at the onset of the GFC, not just on their production lines but also in their motorsport programs - F1 was the first casualty - and new-product development.

We are now seeing the results in Australian showrooms, where the Corolla and Civic are now mid-pack in the small-car class and former pacesetters including the Mazda6, Honda Accord Euro and even the locally-made Camry are struggling against newer and better rivals.  They are fine for everyday transport, but not as impressive as they were just five years ago.

Subaru has also cut costs and its latest styling work - particularly on the Liberty and Outback - reflects a desperate desire to win sales in the USA.  Contrast all of them against the Suzuki Kizashi, which comes from one of the few Japanese brands that held its nerve through the GFT. Suzuki has cut its production targets, and admits that extra Kizashi models are on the back-burner, but is going to do brilliantly well with the car.

Toyota and Honda, in contrast, are relying on value-added deals to keep customers coming in Australia. They are recovering from the economic downturn but nowhere near as rapidly as some of their rivals  - particularly Hyundai.

In Australia, many of our Japanese cars are now also actually built in Thailand. It's not a major drama, because the quality is much the same, but it shows how the battle to cut costs is influencing the Japanese makers. 

The Thai drive also shows that Japan Incorporated is now happy to produce bland transport modules instead of appealing cars, going for numbers first - in showrooms and on the balance sheet. It's a reasonable response to the GFC but is going to cause problems in coming years.

Why? Because Australia is seeing so many classy European cars at more affordable prices - look at the Volkswagen Polo - and because Korean is coming up fast.  Hyundai is now doing a better job than Toyota at building Toyota-style cars, with adventurous styling, classy quality and great prices. It's latest, the i45 replacement for the dowdy Sonata, is really good on every front except its awful steering and lacklustre front suspension.

The i45 is a Camry done better and, like the Kizashi, one of the stars of 2010. And it's not the end for Hyundai, which has all sorts of new models coming from the baby i20 to an overdue sporty car sometime in 2012.

And that's whan the Japanese really could be in trouble. It's not because Hyundai has something new but because the Japanese wound their development programs back during the GFT and the results of that conservative risk management will not really be known until we see - or don't see - the work which should have been done over the past two years.

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