Toyota leaves Pyeongchang podium to South Korean rivals

International Olympic Committee staff attend a meeting ahead of Pyeongchang 2018 Winter Olympic Games, where sponsor Toyota is far from center stage. (Reuters)
Updated 12 February 2018

Toyota leaves Pyeongchang podium to South Korean rivals

PYEONGCHANG: For a major new Olympics sponsor, Japanese carmaker Toyota Motor Corp. is oddly invisible at the Pyeongchang winter Games.
Unlike other top global sponsors such as Coca-Cola and Visa, Toyota is nowhere to be seen, having sent only a few dozen representatives to South Korea for the event.
Its cars are missing from Olympic fleets, the logo is nowhere to be seen and only visiting Toyota officials from other countries such as the US, whose teams it separately sponsors, can wear Olympic rings on their clothing here.
That’s because Toyota realized before signing with the International Olympic Committee (IOC) almost three years ago that these Games, like the South Korean car market, would always belong to Toyota’s local rivals, Hyundai and Kia .
“Toyota felt that giving up some of our benefits from these partnerships at Pyeongchang 2018 was the right thing to do after conferring with the International Olympic Committee and International Paralympic Committee,” a Toyota spokesman said.
Toyota signed its nine-year deal with the IOC in 2015, after Pyeongchang was awarded the Games, the result of a 10-year campaign that had been backed by Hyundai and Kia which were already in separate sponsorship talks with local organizers.
Toyota still has the right as global IOC sponsor to use the Olympics logos in its advertising elsewhere in the world, and it did so prominently this month in two commercials during the US Super Bowl, when a 30-second ad can cost $5 million.
The Japanese firm’s marketing during the Pyeongchang Games, which formally opened on Friday, will be seen in 30 countries — though not in South Korea, a market where foreign carmakers have long struggled, especially those from Japan.
Instead, Hyundai and its affiliate Kia are making the most of their domestic sponsorship rights, having signed their own separate deals with the Pyeongchang Games organizing committee.
They have erected pavilions in Olympic venues to show off their latest-technology vehicles, including Hyundai’s hydrogen-fueled autonomous vehicles.
Hyundai, whose distinctive all-black pavilion was designed by British architect Asif Khan, has provided 4,100 cars and shuttle buses for the IOC to use for its VIPs and athletes.
Hyundai declined to comment.
The Pyeongchang organizing committee referred questions to the IOC, which said in an email to Reuters: “In the short term, we worked in partnership with Toyota to enable Pyeongchang to continue their local sponsorship agreement which will provide additional support to the local organizers.”
Toyota’s readiness to give up on sponsorship rights in South Korea underlines the tough nature of the market for foreigners, especially for exporters from Japan, a former colonial power that still inspires ill feeling among South Korean consumers.
Imported cars make up about 15 percent of the market, and these are mostly from European makers, South Korean industry data show. Toyota has been in the market since 2001 and its brands accounted for barely a tenth of imports last year.
Insisting on the domestic rights might not only have been futile from a marketing perspective, it could have backfired.
David Krysiek, chief executive of Atlanta-based brand communications firm Brandware, said Toyota avoided “the disastrous prospect of being seen as a carpet-bagger in Korea.”
Toyota can at least count on dominating at the next Olympics, the summer Games in Tokyo in 2020, but the one after that could prove tricky: the 2022 winter Olympics in Beijing.
China, parts of which were also colonized by Japan, is another auto market that is tough for Japanese firms, but it is the world’s largest and Toyota has no plans to take a step back from the domestic sponsorship rights, as it did in South Korea.
In 2012, Japanese car sales in China nose-dived during a flare-up in a territorial dispute between the two nations. Thousands of Japanese-brand cars were vandalized and mobs attacked dealerships in several cities.
Sentiment has since recovered, and Toyota has set an upbeat sales forecast in China for this year.
“Right now things are more or less back to normal, but we are still handicapped by the past,” said the head of a major Japanese carmaker’s China operations, speaking on condition of anonymity because of the sensitivity of the issue.
He said “normal” meant that about 10 percent of Chinese consumers would not contemplate buying a Japanese car.
Rob Prazmark, chief executive of 21 Sports & Entertainment Marketing Group, who helped create the IOC top sponsors program, said there was also little risk in China that Toyota would be seen to be gatecrashing a party meant for local carmakers.
“China has its own local auto industry but it’s not like what Hyundai and Kia means to Korea,” he said.

Japan’s households tighten purse strings as sales tax and typhoon hit

Updated 06 December 2019

Japan’s households tighten purse strings as sales tax and typhoon hit

  • Falls in factory output, jobs and retail add to fears of worsening slowdown after Tokyo unveils $122bn stimulus package

TOKYO: Japanese households cut their spending for the first time in almost a year in October as a sales tax hike prompted consumers to rein in expenses and natural disasters disrupted business.

Household spending dropped 5.1 percent in October from a year earlier, government data showed on Friday.

It is the first fall in household spending in 11 months and the biggest fall since March 2016 when spending fell by 5.3 percent. It was also weaker than the median forecast for a 3 percent decline.

That marked a sharp reversal from the 9.5 percent jump in September, the fastest growth on record as consumers rushed to buy goods before the Oct. 1 sales tax hike from 8 percent to 10 percent.

“Not only is the sales tax hike hurting consumer spending but impacts from the typhoon also accelerated the decline in the spending,” said Taro Saito, executive research fellow at NLI Research Institute.

“We expect the economy overall and consumer spending will contract in the current quarter and then moderately pick up January-March, but such recovery won't be strong enough.”

Household spending fell by 4.6 percent in April 2014 when Japan last raised the sales tax to 8 percent from 5 percent. It took more than a year for the sector to return to growth.

Compared with the previous month, household spending fell 11.5 percent in October, the fastest drop since April 2014, a faster decline than the median 9.8 percent forecast.

Analysts said a powerful typhoon in October, which lashed swathes of Japan with heavy rain, also played a factor in the downbeat data. Some shops and restaurants closed during the storm and consumers stayed home.

Separate data also showed the weak state of the economy.

The index of coincident economic indicators, which consists of a range of data including factory output, employment and retail sales data, fell a preliminary 5.6 points to 94.8 in October from the previous month, the lowest reading since February 2013, the Cabinet Office said on Friday.

It was also the fastest pace of decline since March 2011, according to the data.

Real wages adjusted for inflation, meanwhile, edged up for a second straight month in October, but the higher levy and weak global economy raise worries about the prospect for consumer spending and the overall economy.

While the government has sought to offset the hit to consumers through vouchers and tax breaks, there are fears the higher tax could hurt an economy already feeling the pinch from global pressures.

Japan unveiled a $122 billion fiscal package on Thursday to support stalling growth and as policymakers look to sustain activity beyond the 2020 Tokyo Olympics.

A recent spate of weak data, such as exports and factory output, have raised worries about the risk of a sharper-than-expected slowdown. The economy grew by an annualized 0.2 percent in the third quarter, the weakest pace in a year.

Analysts expect the economy to shrink in the current quarter due to the sales tax hike.