Market Intelligence
OEM Auto Parts Japan Trade Development

Japan Automotive OEM and Parts

The automotive industry is Japan’s leading industry, with 5.4 million people, roughly 8% of the nationwide workforce, having an automotive-related job. Latest figures (2018) indicate that approximately 17 trillion JPY (about $160.5 billion), or about 21% of Japanese total exports are automotive-related products. The past 10  years have seen a tremendous change in the Japanese auto industry, reflected by a decrease in total domestic automobile production to 1.8 million units while total overseas production increased 8.3 million units.

Two sectors present new opportunities for U.S. suppliers of advanced technologies. Increasing global demand for environmentally friendly production and higher safety standards have led to a boom in the Japanese market for cutting edge technologies including electric vehicles (EV) and hybrid vehicles (HV).

The total Japanese EV market stands at 27,000 units in 2018, a 250% increase during the past 10 years. About 97% of EV sales in Japan in 2018 were Nissan Leaf. The Nissan Leaf brand is synonymous with EVs in Japan and expected to grow foreseeable future as the EV category grows. Zero Emission Vehicle (ZEV) are a global trend in the automotive industry and OEMs are working on alliances in order to be successful in this competitive market. GM and Honda Motor confirmed on April, 2020 they would jointly develop two new electric vehicles for Honda and are exploring more ways to expand their alliance. Industry is expected to see other new OEMs alliance in this sector.

Hybrid vehicles (HV) are another category that has been growing in Japan. HV sales stand at 1.4 million units in 2018, an increase of 130% increase during the past 10 years. Toyota Prius used to be the leading and pioneer of HV and still has 13% of the market share in this category but many OEMs are introducing new HV brands leading the Japanese HV market to become quite saturated. However, given their ecofriendly reputation overall market demand for the industry, these two categorizes are expected to grow.

Autonomous vehicle related technology has also become a high priority among Japanese OEMs. U.S. auto parts manufacturers with technologies in the areas of “next-generation” transportation systems, transportation safety, traffic accident reduction, theft-resistance, and electronic components should consider entering this market.

Global demand for autonomous technology is also booming and OEMs are testing out their technologies with their global partners. Nissan introduced new model of Senena with fully equipped level 2 autonomous vehicle technology in 2019 in Japan. Level 2 means partial automation, advanced driver assistance systems or Active Driving Assistant System (ADAS). The vehicle can control both steering and accelerating/decelerating.

Japanese Ministry of Land, Infrastructure, Land, Transportation and Tourism (MLIT) passed a new bill in December 2019 to identify definition and regulation of Level 3 autonomous vehicle technology an area in which Japan is ahead of the rest of the world. Level 3 vehicles have “environmental detection” capabilities and can make informed decisions for themselves, such as accelerating past a slow-moving vehicle, although they still require human override. The driver must remain alert and ready to take control if the system is unable to execute the task. This would encourage OEMs to introduce fully equipped Level 3 capability new models.

Given the spate of high profile traffic accident cases recent years, Japanese consumers demand for traffic accident reduction technology is increasing. SUBARU is leading in the traffic accident reduction technology with their safety system called “EyeSight”.

Increased sales of Sports Utility Vehicle (SUV) in Japan may also present an opportunity for U.S. aftermarket parts providers. SUV domestic sales stands at 514,000 units in 2019 and this shows 37% grows in past 3 years. This trend is expected to continue reflecting people’s appreciation for outdoor activities. U.S. auto aftermarket parts manufacturers should consider attending Japanese auto shows as a way to enter this market.

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