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Japan’s Three-pronged Approach to the Auto Industry

05.30.17

Markus Pfefferer, Managing Director – Asia Pacific, Ducker Worldwide 

Special Report: Japan's Auto Industry by Automotive World

With the exception of cherry blossom and high-tech consumer electronics, cars are probably the first thing people think of when they think of Japan. Since the 1960s, Japan has been one of the world’s top three vehicle producers, making it a global leader in automotive technology.

Most of Japan’s leading brands are from the automotive sector. While US brands such as Kellogg’s and Gillette have become global household names, most of the famous Japanese brands are from the automotive sector, such as Toyota, Honda, Nissan, Mitsubishi, Suzuki and Mazda. They are driven in almost every country of the world, and Japanese automotive components can be found in cars being manufactured by nearly every OEM in the world.

Although the commercial production of vehicles began in 1920, with the production of the DAT by Kaishinsha Motorcar Works, cars built in Japan before World War II tended to be based on European or American models. In the 1930s, Nissan Motors’ cars were based on the Austin 7, while the Toyota AA model was based on the Chrysler Airflow.

From 1925 until the beginning of World War II, Ford and GM dominated the Japanese market. Between 1925 and 1936, the US Big Three’s Japanese subsidiaries produced a total of 208,967 vehicles, dwarfing the domestic producers’ total of 12,127 vehicles. This changed in 1936, when the Japanese government passed the Automobile Manufacturing Industry Law, intended to promote the domestic auto industry.

From these humble beginnings, Japan has become one of the largest car producing nations in the world. In the first quarter of 2008, Toyota surpassed General Motors to become the world’s largest vehicle
manufacturer. In recent years, its market share has decreased slightly due to competition from China and the US. Nevertheless, Japan’s car industry continues to flourish.

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