The Japanese automotive industry sought to strengthen its economy after WWII, and it did it by manufacturing automobiles. Now, the country is a global leader in the automobile industry, with a reputation for cutting-edge technology and innovative concepts. We examine how Japan has catered to the domestic and global markets through its unique qualities, responsiveness to globalized supply networks, move to green technology, and the impact of the global pandemic on the Japanese car market.
Japan’s automobile industry is the world’s third largest, with 78 manufacturers in 22 prefectures employing over 5.5 million people. It is a vital pillar of the country’s economy. Automotive industry accounts for 89 percent of Japan’s manufacturing sector, and car parts suppliers have become a significant component of the country’s economy, branching out into industries like chemicals and rubber. It is a highly inventive and technology-driven business, with growing manufacturing of hybrid and electric vehicles entering the domestic and worldwide markets, as well as a growth in global supply and demand.
Because of the extremely high maintenance costs of imported automobiles, domestic manufacturers such as Toyota, Nissan, Honda, Suzuki, and Mitsubishi dominate the Japanese automotive market. Foreign-manufactured cars are considered more as status symbols. The bulk of Japanese automobile owners live in rural areas, whereas the urban population relies significantly on public transportation.
Kei cars and motorcycles are also affordable alternatives to regular-sized cars that meet the country’s demand for convenience in small spaces; however, as the Japanese automotive industry becomes more environmentally conscious, consumers are shifting away from motorcycles and towards bicycles and e-bikes.
Kei Cars
Japan’s automotive industry developed ‘keijidsha’ (light vehicles), often known as Kei cars, to meet the country’s limited space, ageing society, and rise in single-person households. They are relatively small vehicles that benefit from particular tax benefits and restrictions, making them significantly less expensive than ordinary passenger cars while also making them easier to navigate in Japan’s urban regions.
Although Kei cars are primarily purchased by first-time drivers and as a fashion statement by female drivers in Japan, they are sold throughout Europe. With 1.9 million sold in the previous year and Honda’s N-Box topping Japan’s light automobile sales in 2019, all of Japan’s major automotive brands manufacture ‘keijidsha.’
Japanese Automotive Industry’s Best-Selling Brands
Toyota
Toyota is now Japan’s best-selling automobile brand, selling more vehicles than Nissan and Honda combined. In 2019, it sold 1.5 million automobiles in Japan and 10.7 million worldwide, up from the previous year. Despite its humble beginnings as a textile producer in the mill town of Koromo, it has grown to become one of the world’s major automakers. With their model Toyota Prius, the best-selling passenger car model in Japan, the firm has pushed limits, curated high-quality designs for practical and recreational usage combined, and is responsible for pushing hybrid and electric automobiles to the forefront of the automotive sector in Japan.
Later this year, the business plans to produce a two-seater electric vehicle geared mostly at senior drivers, with the goal of increasing worldwide electric vehicle sales to 5.5 million units by 2025. Not only does this accommodate Japan’s automotive industry, but Toyota recently announced a partnership with Hitachi and JR East to develop hybrid railway vehicles, and the company previously announced plans to build a prototype ‘city of the future,’ a fully-connected ecosystem powered by hydrogen fuel cells at Mt. Fuji’s base.
Nissan
Nissan is a Japanese automotive behemoth that sold over half a million vehicles in 2019 and has since expanded into the global market.
The company, which was founded in 1911 and manufactured vehicles and planes for the Japanese army during WWII, is one of the oldest in the Japanese car industry. It has cooperated with a number of foreign brands, including Austin and Prince Motor Company, but it is most recently involved in a horizontal keiretsu () between Renault and Mitsubishi, which is a vast network of enterprises working closely to maintain mutually beneficial strategic partnerships. In 2019, they sold a total of 10.6 million units.
Nissan has benefited from rising demand for SUVs, light commercial vehicles, and electric vehicles, with the keiretsu accounting for half of all electric vehicles sold globally in 2016. One of these vehicles is the Nissan Leaf, which has sold 140,000 units in Japan alone. The business revealed in July that its new Ayria crossover electric vehicle will go on sale in Japan in 2021 and globally later that year.
Honda
Honda is another behemoth in the Japanese automotive business; this year, Japan and other Asian countries accounted for about half of all vehicle sales. Honda began selling motorcycles in Japan after WWII to help the country become more mobile at a faster and more affordable rate. Despite the recent fall in motorcycle sales in Japan, it remains the most popular motorcycle in the country, with 45.6 percent of the market share in 2019. Along with Suzuki and Yamaha, it is currently one of the most well-known motorcycle manufacturers in the world.
During the 1960s, the firm began producing automobiles, and it has since expanded to include Kei cars and electric vehicles. To promote the use of electric vehicles, the firm recently announced that it would begin selling its first mass-produced electric vehicle in Japan on October 30th. By 2030, Honda wants electric, fuel cell, and hybrid vehicles to account for two-thirds of its global vehicle sales.
Yamaha
Yamaha is a world-leading manufacturer of motorbikes, marine equipment, intelligent machinery, and musical instruments through their sister firm. With a 43.5 percent share of net sales in Asia and a global revenue of 1.7 trillion yen in 2019, it is Japan’s and the world’s second-largest motorcycle brand. The firm was founded in 1955 and produced its first motorcycle the following year. The YA1 was introduced by showcasing it in a motorcycle race in Japan, where competing companies such as Honda would also market the superiority of their products.
Yamaha has maintained this rivalry throughout the years, but as the local market in Japan began to shrink, the two companies partnered up to focus more resources on other Asian countries. Similarly, Japan’s main four motorbike makers announced last year that they will collaborate to create a common standard for electric motorcycles, helping to make the Japanese automobile business even more sustainable. Yamaha also unveiled an electric scooter with Gogoro, and while it will initially target the Taiwanese market, the company hopes to expand in the future.
Suzuki
Suzuki is a versatile firm that makes automobiles, motorcycles, ATVs, engines, and wheelchairs, comparable to Honda. It began as a rising firm and is now one of the main four motorcycle brands dominating the world. It also does extraordinarily well in Japan with its range of Kei vehicles, accounting for over 30% of the market in 2019.
Suzuki formed a keiretsu with General Motors in the 1980s to begin its expansion into the US market, which led to expansion into India, Germany, Thailand, and China. The business said at the start of 2020 that it would follow in Yamaha’s footsteps and release an electric scooter in India, joining the global sustainable vehicle race.
Covid-19’S Impact On The Japanese Automotive Industry
COVID-19 has had an impact on the Japanese automotive market, as it has on most industries. For safety reasons, all Japanese automakers were forced to shut down production sites around the world. In June, Japan’s sales fell by 23%, with Toyota continuing to be the best-performing brand, followed by Honda and Nissan. The Japanese automakers, on the other hand, pledged to protect jobs in the face of the global pandemic, creating a special fund to help people who have been laid off find work and even producing face masks.
The Future Of The Japanese Automotive Industry
While the global pandemic has had a significant influence on Japan’s automotive industry, it is apparent where the industry is headed in terms of creating renewable, green technology for vehicle integration. Electric motorbike demand is higher than it has ever been in Japan, despite dropping sales, so ideally these will be released on the Japanese automobile market soon and help boost growth in the sector. Japan continues to be a leader in this field, and the UK-Japan Trade Agreement will help the Japanese automotive industry in the long run.
