By Giulia. F.
In our previous article published in 2020, we explored how Japan’s automotive market has catered to the domestic and global market appetite, its response to the globalised supply chain, green technology and the effects the pandemic had on the market overall. Two years on, the world is finally opening up, with restrictions being lifted. Interestingly, quite like the end of the Second World War, once again Japan’s automotive market is tasked with the mission of helping boost the country’s economy. In this article, we will underline the Japanese automotive market in 2022 and list key examples from the industry.
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Overview of the Japanese Automotive Market in 2022
Automotive behemoths Toyota, Honda and Nissan are known throughout the world, and their products can be found in all corners of the world. With a significant domestic and international presence, the Japanese automotive industry is integral to the Japanese economy. Domestic car sales are forecast to grow by 7% in 2022, which is welcome news, especially after the economic strain felt in 2020 and 2021 as a result of the Covid-19 pandemic. Indeed, the automotive industry experienced ‘chip shortages’ due to the supply shortages of 2020-2021, but now that the supply chains are stabilising, the Japanese automotive market is not only expected to recover, but the industry is also expected to boost the overall Japanese economy. The manufacturing sector constitutes over 89% of the total GDP in Japan and automotive manufacturing makes a substantial part of this percentage.
Key Challenges in 2022
Like with most countries and across most industries, the key challenges for the automotive industry in 2022 is filling in the gaping hole Covid-19 has left. Japanese car industries faced great difficulties in sales, production and export these past two years. Despite the fact that the Japanese automotive showed some recovery in the early months of 2021, the second half of the year was negatively affected over supply shortages and the sudden appearance of the Omicron variant. Indeed, according to the Japan Automotive Dealers Association and Japan Light Motor Vehicle and Motorcycle Association, compared to last year, sales in both January and February 2022 have actually decreased (by 14.2% and 18.% respectively).
Best-selling brands in Japan’s Automotive Industry
In Japan, the best-selling car brands in 2021 were Toyota, Suzuki, Honda, Daihatsu and Nissan. The top three foreign brands in Japan were all German: Mercedes-Benz, BMW and Volkswagen. Interestingly, none of them made it in the Top 10, underlining that Japanese consumers are more likely to invest in domestic automotive brands.
For a comprehensive history for each of these companies, please check out our article, The Japanese Automotive Market: Driving Strong Demand in 2021 and Beyond
In 2021 Toyota remained by far the best-selling car brand in Japan. Toyota has the largest market share, and Toyota actually gained market share while Suzuki, Honda, Daihatsu and Nissan all maintained sales rank positions despite losing part of their market share. Furthermore, Japan’s bestselling car model in 2021 was Toyota’s Yaris, followed by the Roomy and then the Corolla.
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Alternative fuel vehicles are currently gaining in importance for Toyota. Indeed, Toyota was the first and largest automobile company to offer a hybrid car; the Prius was a resounding success, and the company has since decided to provide hybrid options for its other models, such as the Camry and Avalon. Toyota also recently hiked its 2030 electric vehicle sales goal by 75%. (Source: Best Selling Cars)
In 2021, Suzuki’s unit sales of new motor vehicles in Japan decreased by around 3.57 percent compared to the preceding year. Suzuki is putting a heavy focus on electric vehicles; it recently stated that it will invest ¥150 billion to make electric vehicles and batteries in India to support the country’s decarbonization efforts. Suzuki’s President Toshihiro Suzuki recently claimed that the company’s future mission is to achieve carbon neutrality with small cars. (Source: The Japan Times)
Honda produced around 13.2 trillion Japanese yen in revenue in the fiscal year 2021, which is 12% less than in the previous year, with automobile sales falling by 5 percent. Honda has recently announced that it is collaborating with Sony, in a joint venture that will develop and sell electric vehicles. The two Japanese giants intend to produce a new battery-powerede vehicle by 2025. (Source: Honda)
Revenue for Daihatsu is projected to reach US$23,965m in 2022, showing an annual growth rate of 0.24%. Most revenue for Daihatsu automobiles are generated within Japan. Daihatsu is In 2016, Daihatsu made the decision to become a subsidiary of Toyota – nonetheless, its name and reputation have maintained somewhat independent to Toyota, with its rich history and popular models.
Daihatsu has also recently set a goal of having all of the new automobiles to be fully electrified or hybrid vehicles by 2030. (Source: Daihatsu)
In Japan, Nissan vehicle sales were down 3.6% in 2021 – and whilst passenger car sales remained steady, sales for minicars dropped dramatically. The top-selling Nissan car model in Japan was the Note, which was the fifth most popular car overall (behind four Toyota models). Source: Best Selling Cars.
The Future of the Japanese Automotive Market
Recent conversation within the automotive market seems to centre about electric vehicles. The top Japanese brands are all commited to producing more electric vehicle, however, at this point in time, Japanese manufactureres seem to still favour gasoline-electric hybrids over all-electric vehicles. This is most likely because customers worldwide still lack the infrastructure and demand for battery electric vehicles. Even within Japan, electrical charging points are still hard to come by, concentrated many in metropolitan areas rather than rural areas. In regards to this accessibility issue, the government has raised subsidies for electrical vehicles and aims to install 150,000 charging points by 2030.
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