By Chang-Ran Kim
PARIS, Sept 27 (Reuters) - Success in Europe will probably never be anything like their performance in the United States, but Japanese automakers renewed their confidence this week in grabbing a bigger slice of a shrinking market in Europe, despite the many obstacles they face as marginal players.
At the Paris auto show, which opens its doors to the public on Saturday, Japanese carmakers will showcase key European models they hope will woo drivers in an increasingly competitive market.
Toyota Motor Corp , the world's third-largest automaker and Japan's top, will take the wraps off its all-new Land Cruiser sport-utility vehicle to capitalise on the region's growing taste for the high-profit vehicles, while also displaying its best-selling models.
Meanwhile, Nissan Motor Co , Japan's third biggest carmaker, is banking on its new Micra subcompact to power it to further growth despite the segment's being less profitable than bigger vehicles.
Whether big or small, though, both firms expect to significantly raise their profile in the tough European market, which many believe is crucial given its strict environmental regulations and reputation for having the finickiest drivers.
In volume terms, Toyota is clearly ahead of the pack. Of the 11.3 percent market share that Japanese automakers have taken in Western Europe so far this year, Toyota has the biggest by far, of 4.4 percent, equivalent to 36,350 cars.
Combined, Japanese makers have raised their share by 0.9 percentage points in the first eight months of the year from the same period in 2001 -- a by no means small feat considering the overall market is shrinking by four to five percent.
But Toyota, for one, has said it would not be content until its share reaches 10 percent, though it concedes that could be a long time coming.
"It is Toyota's strong belief that without success in Europe we cannot really be a truly global player," Chairman Hiroshi Okuda told a press briefing at the Paris show on Thursday.
While the company has set an official target of selling 800,000 cars in Europe by 2005, the head of its European operations told Reuters at the show that he was confident of selling one million by that deadline, inching closer to its long-term goal.
DIFFERENT APPROACHES
Despite a common broad goal, Japanese carmakers have distinct approaches and policies toward their European operations.
While Toyota says the key to succeeding in the market is to produce large volumes -- to the tune of one to 1.5 million vehicles a year -- to cut parts procurement costs, Nissan stresses its main objective is to be profitable, with growth in market share following naturally as a by-product.
Nissan President Carlos Ghosn emphasised on Friday the company's policy of putting profits, wealth and value for customers and shareholders first, and not growing "for the sake of growth". True to its word, Nissan is so far the only major Japanese automaker to be making any money in Europe.
Still, if it delivers on its commitment to sell 100,000 additional cars in Europe by 2005, Nissan's market share would climb to 3.6 percent from the current 2.7 percent.
Mazda Motor Corp , Japan's fifth-largest automaker with about one percent of the European market, meanwhile, said recently it wanted to triple its share by the end of the decade, powered by its hot-selling Mazda6/Atenza, as well as the new Mazda2/Demio, which it is introducing in Paris.
The exception is Honda Motor Co , Japan's second biggest automaker, which some analysts say is having the most difficulty making progress in Europe.
Unlike its rivals, Honda has no partnership with a local maker, meaning it faces bigger hurdles for cost-cutting, especially in procuring parts. Despite its prowess in the United States, Honda's share of the European market is just half of Nissan's.
But Honda, known for its staunch go-it-alone policy, has stretched its market share rise by 0.2 percentage points so far this year, with sales volume up 13 percent to over 119,000 units.
The head of Honda's European operations, Minoru Harada, said his company was not concerned about setting a target for growth in market share.
Nevertheless, Honda, like Mazda, is on its way to returning to the black next business year. Toyota officials, meanwhile, told Reuters this week the company expects to do so this term, one year ahead of schedule, thanks largely to its strategy of building a network of new plants in Europe to circumvent import duties and currency swings.
Nissan, armed with a fruitful partnership with Renault, is expecting a rise in profits in Europe this year, with a top executive saying on Friday it should eventually be able to match its French partner's operating profit margin of four to five percent in the long term.