New approach

Analysts said a new product offensive helped Japanese brands reverse the downward trend.

Honda introduced a brand-new model tailored for the Chinese market－the Crider－last year and brought the new Fit and Crosstour this year. Toyota launched the new-generation Corolla recently as well as its sporty Levin model.

Auto industry analyst Zhang Zhiyong said that Japanese carmakers are learning from competitors Volkswagen and Hyundai to accelerate introduction of new products.

Volkswagen and Hyundai both developed a number of new variants based on the same model, a strategy that proved to be very successful in China because local customers are keen on new products, Zhang said.

Yet Japanese carmakers are unlikely to return to their former status as the market leaders in China that they held before 2012, analysts said.

Japanese carmakers jointly held a market share of 19.4 percent in 2011. At their peak in 2008, they had more than 30 percent.

Amid fierce competition, Japanese brands have lost the advantage in important segments like mid-sized sedans and SUVs where they used to lead, said Zhu Bin, a senior market analyst of LMC Automotive.

Major competitors such as Volkswagen are also making inroads into the southern market traditionally dominated by Japanese carmakers, he said.

Zhu noted that Japanese brands are not in a position to launch a large-scale counter attack at the moment, so they can only work to defend their current share by doing a good job in compact and small car segments.

In addition, "fluctuating Sino-Japanese relations will continue to affect Japanese brands", he said.

Their German counterparts clearly enjoy a better relationship with the Chinese government.

During German Chancellor Angela Merkel's recent trip to China, German carmaker Volkswagen and its local partner FAW signed a joint declaration to build new vehicle plants in Qingdao and Tianjin.

China and Germany signed an agreement earlier this month to use the same charging standard for electric vehicles in hopes of boosting development of the market for new-energy cars in the two countries.

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