Analysis: Will the Japanese auto industry cut ties with Europe?

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The harshest of these headwinds currently looks like emissions, with the threat of fines from the European Union and, from next year, the UK under its carbon copy emissions regulations. “With such strict CO2 targets in Europe, a clear BEV [battery-electric vehicle] strategy is needed to thrive over the next decade,” Chan said. “Mazda, Suzuki and Subaru cannot be said to have identified BEV strategies in Europe at this time.”

These are not issues unique to Japanese automakers, but the fact remains that Europe is at best a secondary market for most of them. Suzuki, for example, makes only 14% of its turnover in Europe and Subaru is mainly a North American company. Add in the production of many models in Japan, where a strong yen has kept export prices high for many years, and it looks bleak.

Why would you react to European demands for things like expensive soft-touch plastics and ambient lighting for your next model when it’s unlikely to cause much ripple in sales here compared to markets at success like China or the United States? The solution lies in partnerships, and for three of these brands, this means a rapprochement with Toyota. Japan’s biggest automaker now has a stake in Subaru (20%), Suzuki (5%) and Mazda (5%) and has resolved short-term emissions issues for all three in Europe.

Suzuki, for example, which had to kill sales of its popular Jimny SUV due to its high emissions, is now selling rebadged versions of the Toyota RAV4 plug-in hybrid (the Across) and Corolla Touring Sports hybrid (the Swace) in Europe.

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