Far Eastern automakers may have built up an enviable reputation for reliability, production efficiency and engineering quality. But they have failed to find an answer to one of the most crucial questions being asked of them: How to build their brands in Europe?
With one clear exception. Subaru may be the smallest of Japanese auto brands in western Europe, but some commentators are beginning to refer to the company as 'Japan's BMW'. While the majority of Japan's carmakers chase volume in Europe, Subaru - a subsidiary of industrial giant Fuji Heavy Industries - is efficiently developing its image as an affordable, premium alternative to Germany's upmarket names.
The strategy appears to be working. Subaru's European sales climbed 17.2 percent to more than 56,000 last year.
'Subaru is in a better position than most of the other Japanese carmakers,' said James Coert, vice president of Subaru Benelux and general manager of the Mitsui trading firm that handles Subaru distribution in Europe.
'Eight years ago, Subaru was in crisis, but it has recovered earlier than its Japanese counterparts,' said Coert. The turnaround has resulted in a leaner model range, lower production costs and a stronger identity.
From next year, Europe will be an even more attractive market for Japan's all-wheel-drive specialist, as import quotas are abolished.
'For more than two decades, ever since we started selling Subarus in the UK, we have had to suffer severe restraints on what we were allowed to sell,' said Ed Swatman, managing director of Subaru UK.
'We have had to face the constant problem of not being able to supply the vehicles our customers wanted, nor in the numbers they required. Now we can look forward to an exciting future without controls.'
The manufacturer is small on a global scale. In 1998 it produced 353,000 cars in Japan, and another 104,000 at its US plant in Lafayette, Indiana. Total worldwide output - both cars and trucks - reached about 600,000 units last year.
But Subaru played a major role in boosting parent company Fuji's profits by 25 percent in the year ended 31 March.
'Some time ago, Subaru decided it was going to target the specialist all-wheel-drive niche,' said Coert. 'It does that by concentrating on sporty models with all-wheel-drive, flat-four engines and high-tech, continuously-variable transmissions.'
All-wheel-drive models make up 70 percent of Subaru's car output. Its core European products are the Impreza, Legacy and Forester. The lower medium Impreza range is characterized by the Turbo version, which has received widespread praise in Europe for its high-performance capabilities and taut handling. The Forester is claimed to be the world's first sport-activity vehicle - a combination of sport-utility and station wagon. A fourth model, the 1.3-liter Justy, is an all-wheel-drive version of the Suzuki Swift.
Despite the changes in import rules, there are no plans at Subaru to rapidly increase exports to Europe. The brand has committed itself to a controlled growth.
Coert said he expects Subaru's global output to grow to a maximum of 1 million cars. 'It will remain a minor player, but with the backing of the powerful Fuji Heavy Industries group,' he said. Nissan also holds a 5 percent stake in Subaru.
Coert said Subaru is considering the introduction of a well-equipped version of its Pleo supermini to Europe. 'But such a launch has to be in line with our niche model strategy,' he added. 'We see possibilities of annual sales of between 12,000 and 18,000.' A decision on the Pleo will be taken at the end of the year.
Subaru has always been strong in Switzerland and Austria, where buyers choose all-wheel-drive vehicles to cope with slippery road conditions. Its superminis are popular in the Netherlands. All-wheel-drive models currently make up 90 percent of Subaru sales across Europe.
'The mix between our all-wheel-drive models and the cheaper superminis varies from country to country,' said Coert. 'But we would eventually like superminis to account for 20 percent of our European sales.'
Subaru has also tried hard to strengthen its image through international rallying.
'Rallying has put our name clearly on the map,' said Coert. 'Now everybody knows what Subaru stands for.'
Subaru Benelux and Subaru Italy are full Mitsui subsidiaries. Distribution in the UK and Sweden is carried out by the International Motors Group. The Swiss Frey group sells Subarus in Switzerland, France and Germany, in a venture with Mitsui.