Japan is currently the world’s 3rd (with an annual production of 9.9 million automobiles in 2012.) and 1st from 1980-1993 and 2006-2008 the largest automobile manufacturer and exporter and has sixth of the world’s ten largest automobile manufacturers in ranking. In addition to its massive automobile industry, Japan also is the home to manufacturers of other types of vehicles, like power sports vehicle manufacturers Kawasaki and Yamaha, and heavy equipment manufacturers Kubota, Komatsu, and Hitachi.
It is home to some of the world’s largest automotive companies such as Toyota, Honda, Nissan, Suzuki, Mitsubishi, Isuzu, Mazda, and Subaru. The Japanese automotive industry is one of the most prominent and largest industries in the world. Japan has been in the top three of the countries with most cars manufactured since the 1960s, surpassing Germany. The automotive industry in Japan rapidly increased from the 1970s to the 1990s (when it was oriented both for domestic use and world-wide export) and in the 1980s and 1990s, overtook the U.S. as the production leader with up to 13 million cars per year manufactured and significant exports. After massive ramp-up by China in the 2000s and fluctuating U.S. output. Japanese investments helped grew the auto industry in many countries throughout the last few decades.
Japanese Zaibatsu (business conglomerates, the Big Four Zaibatsu in chronological order of founding, Sumitomo, Mitsui, Mitsubishi, and Yasuda are the most significant zaibatsu groups) began building their first automobiles in the middle to late 1910s. The companies went about this by either designing their own trucks (the market for passenger vehicles in Japan at the time was small), or partnering with an European brand to produce and sell their cars in Japan under license. Such examples of this are Isuzu partnering with Wolseley Motors (UK), and the Mitsubishi Model A, which was based upon the Fiat Tipo 3. The demand for domestic trucks was greatly increased by the Japanese military build-up before World War II, causing many Japanese manufacturers to break out of their shells and design their own vehicles. In 1970s Japan was the pioneer in robotics manufacturing of vehicles.
Automobile Manufacturing is an integrated Industry
An automobile typically is composed of 20,000 to 30,000 parts, all of which even the largest manufacturers cannot produce themselves. Automakers therefore either outsource production or purchase finished products (such as tires, batteries, air-conditioners and audio systems), including products manufactured abroad. The volume of imported components increases yearly. Automobile manufacturing is thus an integrated industry because it relies on many supporting industries to produce the great diversity of materials and components it uses. Trends in the automobile industry, which makes huge investments in equipment and research-and-development activities, are considered a barometer of the economy. The automotive industry is one of the Japanese economy’s core industrial sectors. In 2010 automotive shipments accounted for 16.4% of the total value of Japan’s manufacturing shipments, and 36.6% of the value of the machinery industries’ combined shipments. Automotive shipments (both domestic and export shipments, including motorcycles, auto parts, etc) in value terms totalled 47.3 trillion yen in 2010, up 16.8% from the previous year.
Japan Vehicle Export Statistics
Each year approximately 1,000,000 used vehicles are exported to various countries around the world from Japan. Generally, used vehicles from Japan are of high quality, well serviced, reasonably priced and are of low mileage in comparison to other markets. This has made them very popular around the world. JEVIC has updated the latest Export Statistics of Used Vehicles from Japan.
The Japanese Export Statistics are generated from Japanese Customs information and includes vehicles with a FOB value of JPY200,000 and more.
During the 1960s and 1970s, imports grew in tandem with exports, at an average annual rate of 15.4% during the 1960s and 22.2% during the 1970s. In a sense, import growth over much of this period was constrained by exports, because exports generated the foreign exchange to purchase the imports. During the 1980s, however, import growth lagged far behind exports, at an average annual rate of only 2.9% from 1981 to 1988. This low level of import growth led to the large trade surpluses that emerged in the 1980s.
In general, Japan has not imported an unusually large amount as a share of its GNP, but it has been highly dependent on imports for a variety of critical raw materials. Japan has by no means been the only industrialised nation dependent on imported raw materials, but it has depended on imports for a wider variety of materials, and often for a higher share of its needs for these materials. The country imported, for example, 50% of its caloric intake of food and about 30% of the total value of food consumed in the late 1980s. It also depended on imports for about 85% of its total energy needs (including all of its petroleum and 89% of its coal) and nearly all of its iron, copper, lead, and nickel.
The long-term growth in imports was facilitated by several major factors. The most important was general growth in the Japanese economy and income levels. Rising real incomes increased demand for imports, both those consumed directly and those entering into production. Another factor was the shift in the economy toward greater reliance on imported raw materials. Primary energy sources in the late 1940s, for example, were domestic coal and charcoal. The shift to imported oil and coal as major energy sources did not come until the late 1950s and 1960s. The small size and poor quality of many of the mineral deposits in Japan, combined with innovations in ocean transportation, such as bulk ore carriers, meant that as the economy grew, demand outstripped domestic supply and cheaper imports were utilised.
The price of imports was also a factor in their growth. In 1973 Japan’s import price index was at essentially the same level as in 1955, partly because of the appreciation of the yen after 1971, which reduced the yen price of imports, but also because of the reduced costs of ocean shipping and stable prices for food and raw materials. For the rest of the 1970s, however, import prices skyrocketed, climbing 219% from 1973 to 1980. This dramatic price rise, especially for petroleum but by no means confined to it, was responsible for the rapid growth of the dollar value of imports during the 1970s, despite the slower growth of the economy. During the 1980s, import prices fell again, especially for petroleum, dropping by 44% from 1980 to 1988. Reflecting these price movements, the dollar value of petroleum imports rose from about US $2.8 billion in 1970 to nearly US $58 billion in 1980, and then fell a low of US $26 billion in 1988 before making a slight recovery to US $41 billion in 1990.
A third factor affecting imports was trade liberalisation. Reduced tariff rates and a weakening of other overt trade barriers meant that imports should have been able to compete more fully in Japan’s markets. The extent to which this was true, however, was subject to much debate among analysts. The share of manufactured imports in GNP changed very little from 1970 to 1985, suggesting that falling import barriers had little impact on the propensity to purchase foreign products. Falling trade barriers might become more significant in the 1990s as liberalisation continues.
Yet another factor determining import levels was the exchange rate. After the ending of the Bretton Woods System in 1971, the yen appreciated against the US dollar and other currencies. The appreciation of the yen made imports less expensive to Japan, but it had a complex effect on total imports. Demand for raw material imports was not affected much by price changes (at least in the short run). Demand for manufactured goods, however, was more responsive to price changes. Much of the rapid increase in imports of manufactures after 1985, when the yen began to appreciate rapidly, can be attributed to this exchange-rate effect.
All factors combined led to the rapid growth of imports in the 1960s and 1970s and their very slow growth in the 1980s. Rapid economic growth combined with stable import prices and the shift toward imported raw materials brought high import growth in the 1960s. The big jump in raw material prices in the 1970s kept import growth high despite lower economic growth. In the 1980s, falling raw material prices, a relatively weak yen, and continued modest economic growth kept import growth low in the first half of the decade. Import growth finally accelerated in the second half of the 1980s, when raw material prices stopped falling and as the rise in the value of the yen encouraged manufactured imports.
Japan imported a wide range of products, although energy sources, raw materials, and food were the major items. Mineral fuels, for example, rose from under 17% of all imports in 1960 to a high of nearly 50% in 1980. They had declined to under 21% by 1988. A small increase was experienced by 1991 when mineral fuel imports increased to 23%. These shifts show the enormous impact of price changes on imports. Swings in imports of other raw materials were far less dramatic, and many declined over time as a share of total imports. Metal ores and scrap, for example, declined steadily from 15% in 1960 to less than 5% in 1988 and less than 4% in 1991, reflecting the changing structure of the economy, which moved away from basic metal manufactures to higher value-added industries. Textile materials also dropped from 17% of total imports in 1960 to just under 2% in 1988 and just over 1% in 1991, as the textile industry became less important and imports of finished textiles increased. Foodstuffs, however, were relatively steady as a share of imports, rising from just over 12% in 1960 to 15.5% in 1988. By 1991 a slight decline, 14.5%, was experienced.
Manufactured goods-chemicals, machinery and equipment, and miscellaneous commodities-gained as a share of imports, but the variation among them was considerable. Manufactures were about 22% of total imports in 1960, remained at just under 23% in 1980, and then expanded to 49% by 1988. By 1991 they were just over 45%. Imports of textiles, non-ferrous metals, and iron and steel products all showed significant gains, for the same reasons that the raw material imports to produce them had declined. However, chemical and machinery and equipment imports showed little increase in share until after 1985.
The heavy dependency on raw materials that characterised Japan until the mid-1980s reflected both their absence in Japan and the process of import substitution industrialisation, in which Japan favoured domestic industries over imports. The desire to restrict manufactured imports was tensified by the knowledge that the nation needed strong manufacturing industries to generate exports to pay for needed raw material imports. Only with the appreciation of the yen after 1985, and the drop in petroleum and other raw material prices, did this sense of vulnerability ease. These trends were reflected in the rising share of manufactures in imports in the late 1980s.
The globalisation of the automobile industry continues, and the expansion of international alliances is flourishing. With the cost of developing new vehicles spiralling upward, cross-border affiliations are becoming increasingly prevalent. The Japanese automobile industry has forged a wide variety of tie-ups with overseas manufacturers, ranging from technical and marketing co-operation and components supply to full-scale joint vehicle development and production.
Alliances such as these represent a key factor in world car markets increasingly characterised by diversifying demand. The connections enable companies to address niche markets without the staggering costs of development, while competition continues in other areas. The co-operation results in lowered costs and improved efficiency, as well as facilitating the transfer of valuable technical and marketing know-how.
Long-established alliances with Western manufacturers continue to expand and multiply, while increasingly, ties with Asian manufacturers reflect the Japanese automobile industry’s desire to establish a mutually beneficial global system of trade in automobiles and auto parts.
Gradually, political changes and rising disposable incomes in many nations are resulting in increased motorization. Global connections are seen as an effective way to respond to this trend, and will continue to multiply as the world’s automobile industries extend to meet demand in a growing number of markets.
If we overlook minutely, we can undoubtedly say that Japanese automobile industry has obtained remarkable progress in all aspects of Manufacturing, Quality control and Export by leaps and bounds in the past few decades.