Toyota Korea recently relocated its showroom in a busy street in southern Seoul to a quieter area only 2 km away.
Toyota says the new location is lined with showrooms of foreign carmakers, but the real reason seems to be that it cannot afford high rent amid falling sales. The Japanese carmaker sold just 3,564 cars for the first seven months of the year, down 30 percent on-year.
The situation is even worse given that total sales of foreign cars here soared 26 percent over the same period.
Other Japanese carmakers are faring equally poorly. Honda posted a 34 percent plunge in sales over the period, sparking speculation that it might withdraw from Korea.
The five Japanese brands -- Toyota, Lexus, Nissan, Infiniti and Honda -- saw their combined market share drop to 12 percent in the seven months, which is a third of the level in late 2008.
If they fail to find a breakthrough, the figure could fall to one-digit levels.
Industry insiders say that Japanese cars are less attractive to Koreans in terms of price and performance compared to their Korean and German rivals. While cars with diesel engines are gaining popularity here, Japanese brands are offering just gasoline or hybrid models.
German diesel cars are sweeping the top 10 list of bestselling foreign cars, with the exception of the Lexus ES300h.
Toyota, Nissan and Honda also lag behind Korean rivals in the mid-size segment. Toyota's flagship Camry is competing against Hyundai's LF Sonata released in March and the Volkswagen Passat.
Due to the release of the Sonata, the Camry, with a 2.5 liter gasoline engine, sold a mere 1,040 units from January to July, 40 percent of the level a year earlier.
The Nissan Altima and Honda Accord are suffering from similar problems. They have been in the market for over two years and apparently do not appeal to Korean drivers any more. Also, competition has heated up following the launch of the diesel versions of Renault Samsung's SM5 and GM Korea's Malibu.
Japanese cars used to have the edge in quality, but now they have lost their luster as their rivals have caught up in that aspect, said Cho Cheol at the Korea Institute for Industrial Economics and Trade.
"Korean consumers look for foreign cars that can show their individuality, but Japanese models are all a bit samey," he added.
◆ New Models
Toyota Korea hopes to turn the tables by rolling out five or six new models, mostly SUVs, in the second half of this year, including the Lexus NX300h hybrid and partly modified versions of the Sienna minivan and the Camry.
Nissan Korea is trying to reestablish its footing with diesel models. The diesel version of the Infiniti Q50 mid-sized sedan is already gaining back some of the automaker's market share. It has also released the Qashqai crossover with a diesel engine.
Honda is taking a different approach. It is cutting costs and has no plan to launch a new model this year. Its losses are being set off against profits from the motorcycle business that sold over 10,000 units last year.
An industry insider says he does not understand why some Japanese automakers are being so passive as it will not help them regain their brand value and win customers back.