Japan’s annual demand for cars and trucks is expected to be 17% higher in 2004 than in 1999 but still fail to eclipse its 1990 peak, according to a report issued by the global forecasting firm Standard & Poor’s DRI.
The report, Japan’s Automotive Industry: The Next Decade, provides comprehensive analysis and forecasts for Japan’s automotive sector through 2009, including the outlook for both sales and production. Standard & Poor’s DRI foresees small cars continuing to dominate the Japanese market despite economic improvements. It also predicts an increase in motor vehicle production by Japanese manufacturers over the next five years, though mostly in Japanese-owned plants in Asia, North America and Europe.
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“The Japanese vehicle market has matured, and growth in demand is expected to be limited and more cyclical than in the past,” says Greg Ornatowski, the report’s principal author. “With passenger cars accounting for 71% of 1999 sales, the industry relies heavily on consumer demand, which has been declining steadily.”
Total new vehicle demand declined 24% over the course of the 1990s, from 7.8 million units in 1990 to just 5.9 million in 1999. In the first half of 2000, the market has been virtually flat against last year. The report projects that after the stagnation of recent years demand will climb from 2001 to reach 6.9 million units in 2004. Demand won’t get much higher: it is expected to reach 7.0 million units in 2009 – still about 800,000 vehicles shy of the 1990 high.
A major feature of Japan’s domestic car market over the past eight years has been a gradual shift toward smaller cars due to difficult economic conditions. Though the share of larger cars is expected to increase somewhat over the next 10 years, demographic trends – a premium on garage space, smaller families and an increase in two-car households – will prevent large cars from matching previous market share highs.
On the production side, output within Japan, which fell from 13.5 million units in 1990 to 9.9 million units in 1999, is expected to remain relatively flat through 2004. Faced with this domestic scenario, vehicle manufacturers will reduce production capacity in Japan by 2.4 million units over the next five to six years, increasing plant utilization rates from 74% of capacity in 1999 to 90% of capacity in early 2005. Market pressures are also driving smaller manufacturers such as Mitsubishi and Fuji Heavy to forge stronger partnerships with Western automotive manufacturers. Opportunities for Western companies to affiliate with Japanese suppliers are increasing, as weaker suppliers seek strong partners.
But an increase in light vehicle production overseas, particularly in other Asian markets, will push total production by Japanese manufacturers from 15.8 million in 1999 to 18.4 million in 2004. Overseas production has risen strongly since it stood at 3.1 million units in 1990, reaching 6 million in 1999 and a projected 8.4 million in 2004. The greatest increase in overseas output from 1999 to 2004 will occur in Asia (1.3 million units), followed by North America (600,000 units) and Europe (450,000 units). More than half of the increases will come from light trucks (1.4 million units), while the remainder will be mainly passenger cars (900,000 units).
Japan’s Automotive Industry: The Next Decade is a special report of Standard & Poor’s DRI’s Global Automotive Service. The Asian Automotive Service, issued three times a year, includes a comprehensive analysis of the automotive industry in all the major Asian countries, including detailed vehicle sales and production forecasts.
Japan: new motor vehicle registrations by year
Source:
Japan Automobile Dealers Association, Inc.
Japan Mini Vehicles Association, Inc.
