The automobile industry is one of the Japanese economy’s core industrial sectors, employing 5.4 million people which is about 8.3% of entire Japanese labor force. Major sector influences include global economic conditions and market demand, exchange rate fluctuation, natural disasters, and government incentive programs. The industry as a whole is impacted by an ageing society and decreasing population.
The Japanese population has continued its decline in recent years, and there is a projected decrease of over 30 million by 2050, bringing the overall population under 100 million. This is likely to trigger decrease the car sales in the future in Japan. The total production stands at 9.7 million units in 2017, it has been three years for the increase compared to the previous year. The total new car sales stand at 5.23 million units in 2017, an increase of 5.3% over the previous year. The total number of automotive exports is increasing as Japanese auto makers continue to seek international expansion opportunities. The exports totaled 4.7 million units in 2017, a 1.05% increase over the previous year. The numbers of registered vehicles in Japan is 78 million units in 2017, a 0.4% increase over the previous year.
Due to technological developments in fuel efficiency and safety technologies, Japanese drivers tend to own their own cars longer. The development and integration of safety technology into vehicles over the last decade has played a critical role in extending time of ownership. The number of traffic accidents in Japan are nearly half of what they were in 2005.
japan
Summary
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Japanese auto manufacturers have maintained “keiretsu relationships” under which they deal almost exclusively with other Japanese auto parts manufacturers by building close personal and business relationships. On one hand, this competition-free keiretsu system strengthened relations within the Japanese auto supply chain between suppliers and manufacturers; however, over time globalization has challenged this system. In order to survive global competition, firms have been expanding toward a more keiretsu-free procurement environment and freer and more flexible competition. This gradual shift may enable U.S. auto parts manufacturers to enter the market.
A variety of nontariff barriers impede access to Japan’s automotive market, and overall sales of U.S.-made vehicles and automotive parts in Japan remain low. Nontariff barriers include certain issues relating to certification; unique standards and testing protocols; an insufficient level of transparency, including the lack of sufficient opportunities for input by interested persons throughout the process of developing regulations; and hindrances to the development of distribution and service networks.
Market Entry & Barriers