Japan Automobile Industry

Japan Automobile Industry
Global Business Environment
Presented By:-
Bhanu Negi
Institute of Technology & Science Page 1

Content Page
Chapter Page
Introduction 3
Automobile Company in Japan
About JAMA 4
Objective 5
Industry Environment 6
 PEST 6
 SWOT 9
Research Methodology 12
Review of literature 16
Conclusion 16
Introduction

The Japanese Automobile 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 manufacture 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 worldwide 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, Japan is now currently the third largest automotive producer in the world with
an annual production of 9.9 million automobiles in 2012. Japanese investments helped grow the auto industry in
many countries throughout the last few decades.
Japanese zaibatsu (business conglomerates) 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 a 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 the 1970s
Japan was the pioneer in robotics manufacturing of vehicles.
The country is home to a number of companies that produce cars, construction vehicles, motorcycles, ATVs,
and engines.
JAPAN AUTOMOBILE MANUFACTURING ASSOCIATION
JAMA Established in 1967 Its the Japan Automobile Manufacturers Association. (JAMA) is a non-profit
industry association which comprises Japan's fourteen manufacturers of passenger cars, trucks, buses and

motorcycles. Its organization today is the result of the merger of the Japan Motor Industrial Federation
(JMIF) and the Japan Automobile Industry Employers’ Association (JAIEA) with JAMA in May, 2002.
Automobile manufacturing integrates many supporting industries, and automobile use is the focus of a
wide range of related industries. Directly or indirectly, roughly 9% of Japan’s working population is
involved in auto industry-related work. Auto production furthermore accounts for 16% of the total value
of Japan’s manufacturing shipments and for 37% of the value of the machinery industries’ combined
shipments. The automotive industry is thus one of the Japanese economy’s core industrial sectors. The
globalization of auto manufacturing also contributes significantly to local and national economies around
the world.
JAMA works to support the sound development of Japan’s automobile industry and to contribute to social
and economic welfare.
Chairman of JAMA :- Fumihiko IKE
Objective of JAMA
To Promote the sound development of the Japanese automobile industry and contribute to social and
economic welfare.
Total Member company of JAMA
 Daihatsu Motor Co., Ltd.
 Fuji Heavy Industries Ltd.
 Hino Motors, Ltd.
 Honda Motor Co., Ltd.
 Isuzu Motors Limited
 Kawasaki Heavy Industries, Ltd.
 Mazda Motor Corporation
Other member:-
 General Motors Japan, Ltd.
 Mitsubishi Motors Corporation
 Mitsubishi Fuso Truck & Bus corporation
 Nissan Motor Co., Ltd.
 Suzuki Motor Corporation
 Toyota Motor Corporation
 UD Trucks Corporation
 Yamaha Motor Co., Ltd.

Automobile Company in Japanese
Toyota Honda
Daihatsu Nissan
Suzuki Mazda
Mitsubishi Subaru
Isuzu Kawasaki
Yamaha Mitsuoka
Hino

In the Japan automotive industry is a wide range of companies and organizations involved in
the design, development, Manufacture, marketing, and selling of motor vehicles. It is one of the world's
most important economic sectors by revenue. The automotive industry does not include industries
dedicated to the maintenance of automobiles following delivery to the end-user, such as automobile repair
shops and motor fuel filling stations.
Consumer Reports states that Japanese manufactured automobiles are among the most dependable and
reliable available. Furthermore, certain makes and models of Japanese cars appear in the Consumer
Reports lists of most reliable used cars year after year. Therefore, this article will discuss some of the best
Japanese used vehicles on the road today
Best SUV model
At the world level SUV car more from the Japan. First rank is Maintain by the Toyota land cruiser, and third
level by the Subaru forester.
Objective
The purpose of this report is to analysis the Japanese automobile industry, and the success of their own market
place.
And also an environmental study, including the use of a PEST and SWOT analysis will be undertaken to
analyse the situation that is faced by Japanese automobile industry and study Japanese top brand in the
world level and domestic level.
What are the key factor affecting the automobile industry.
JAPAN
Japan officially the state of Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the
east of the Sea of Japan, China, North Korea, South Korea, South Korea and Russia, stretching from the Sea

of Okhotsk in the North to the East China Sea and Taiwan in the south. The characters that make up Japan
name mean “Sun –Origin” which is why Japan is referred to as the “Land of the Rising Sun”.
Industry Environment
PEST analysis of any industry sector investigates the important factors that are affecting the industry and
influencing the companies operating in that sector. PEST is an acronym for political, economic, social and
technological analysis. Political factors include government policies relating to the industry, tax policies,
laws and regulations, trade restrictions and tariffs. The economic factors relate to changes in the wider
economy such as economic growth, interest rates, exchange rates and inflation rate, etc. Social factors
often look at the cultural aspects and include health consciousness, population growth rate, age
distribution, changes in tastes and buying patterns, etc. The technological factors relate to the application
of new inventions and ideas such as R&D activity, automation, technology incentives and the rate of
technological change.
PEST Analysis of Japan Automobile Industry
Political Analysis
 The politics of Japan is conducted in a framework of a multi-party
parliamentary representative democratic Constitutional monarchy where
the Emperor acts effectively as the symbolic Head of state, and the Prime Minister acts as
the Head of government and the head of Cabinet which directs the executive branch.
 Political agenda ( Relation with neighbour country)
Economic Analysis

The economy of Japan is the third largest in the world by nominal GDP, the fourth largest by purchasing
power parity and is the world's second largest developed economy. According to the International
Monetary Fund, the country's per capita GDP (PPP) was at $35,855 or the 22nd highest in 2012.
 GDP ($5.964 trillion)
 GDP growth rate -1.7% (Q2 2014 )
 Inflation 3.2% (May 2014)
 Unemployment Rate 4.6%
 GDP contribution by sector Agriculture 1.2% Industry 27.5% Service 71.4%
 Foreign direct investment by industry
 Automobile Industry (16%)
 Exports: Japan's main export goods are cars. Most important trade partners are China and the
USA, followed by South Korea, Taiwan, Hong Kong, Singapore, Thailand and Germany.
In 2013 total 4,674,633 motor vehicle Export by the Japanese automobile to all above country.
 Imports: Japan has a surplus in its export/import balance. The most important import goods
are raw materials such as oil, foodstuffs and wood. Major supplier is China, followed by the
USA, Australia, Saudi Arabia, South Korea, Indonesia and the United Arab Emirates.
 Most Japanese auto-related companies are facing union demands for higher pay as a weaker
yen boosts profits at manufacturers.
 Japanese auto sales in April 2013 dropped 5.5 percent after a sales tax hike it create a low
demand in Domestic market.
http://www.jama-english.jp/publications/MIJ2014.pdf
Social Analysis
 Social and demographic analysis

 Japan's population is over 126 million. Most Japanese reside in densely populated urban areas.
Japan's capital city is Tokyo.
 There is only one official language spoken in Japan, which is Japanese. However, many
Japanese are able to understand English.
 Human development index Japan ranks 17 (Index Number .89) among the 174 countries.
http://hdr.undp.org/en/countries/profiles/JPN
 With higher literacy rate and better economy, the younger generation (Generation X)
tends to personally own a car, as a requirement or as a social s tatus. Contrary to the
older generation where a family owns a single car, now a family might own several cars
depending on the numbers of family numbers.
Average Age in Japan
 Total 45.8year male 44.4 year, female 47.2 year ( 2013)
Religions & its share from population
106,000,000
96,000,000
Shinto Buddhism Christianity Islam Theravada Buddhism
120,000,000
100,000,000
80,000,000
60,000,000
40,000,000
20,000,000
0
Impact in Automobile Industry
2,000,000 125,000 1,500 600
Judaism
Series1
 In Japan there is 8.7% (5.47 Million) of total population directly or indirectly working in the
automobile Industry, that means it is generating a huge employment for Japanese people.
 Japanese car manufacturers had to build manufacturing plants across the globe total 178 plants just
in foreign countries (JAMA).
http://www.ukessays.com/essays/marketing/the-automobile-manufacturing-industry-of-japan-marketing-essay.php#ixzz3BhmqrOKf

 Not only in Japan even in U.S. 320,000 workers are directly employed in Japanese automobile brand.
104,000 are associate intermediate as goods supplier for Japanese automobile brand.
Rutgers University (Dr. Thomas Prusa
http://econweb.rutgers.edu/prusa
Japan R&D and Technological Factors
 R&D expenditure in Japan
High tax subsidy rate to businesses for R&D (rank: 10)
Japanese market is always know for innovation, they are the ones who come up with
technology which is eco-friendly and efficient
They also have huge number of patents in automobile industry to support their innovation
capabilities. Facing increasing competition from China and South Korea, manufacturing in Japan
today now focuses primarily on high-tech and precision goods, such as optical equipment,
hybrid cars, and robotics.
 Impact of technology in industry ( Growing In the Manufacturing sector and Service Sector)
 Demands for hybrid vehicles are growing in the automobile market. Due to the rising energy
cost and increased emissions regulations, demand for light hybrid electric vehicles is
expected to increase hugely. With regard to environmental and energy issues, Nissan has
placed hybrid technology as one of its core technologies.
 Technology in Japanese Vehicle
Electric Power Steering
 With this technology, steering is assisted by an electric motor rather than by hydraulic pressure.
This boosts fuel efficiency since the steering assistance does not place any load on the engine.
Hydrogen Vehicles
 Hydrogen vehicles are powered by hydrogen that is subjected to combustion. (Fuel cell vehicles are
also powered by hydrogen which, without combustion, is converted into
 Electricity by the fuel cells— The hydrogen combustion process generates only water and some
nitrogen oxides (NOX); no CO2, carbon monoxide, hydrocarbons or Sulfur compounds are released.
 They are bringing to market a traffic-jam pilot, a technology enabling cars to drive autonomously -
and safely - on congested highways. They are also working on fully-automated parking systems
available across a wide range of vehicles.

http://www.ukessays.com
SWOT Analysis
A SWOT analysis (SWOT matrix) is a structured planning method used to evaluate the Strength, Weakness,
opportunities and Threats involved in a project or in a business venture. A SWOT analysis can be carried
out for a product, place, industry or person. It involves specifying the objective of the business venture or
project and identifying the internal and external factors that are favourable and unfavourable to achieve
that objective.
Strength:- Characteristics of the business or project that give it an advantage over others.
Weakness:- Characteristics that place the business or project at a disadvantage relative to others.
Opportunities:-Elements that the project could exploit to its advantage.
Threat:- Elements in the environment that could cause trouble for the business or project.
Strength
1. Global demand for environment friendly vehicles:- Vehicles have been a major factor in intensifying
greenhouse effect by emitting large quantities of CO2 and heavily polluting air. Consumers are more
aware of this negative impact and are more likely to buy environmentally friendly vehicles that emit
much less CO2 and are fuel-efficient & Safety.
2. R&D facility
3. Innovative Culture:- In term of new car , SUV and new Engine ( Internal combustion engines ) To
improve product quality and efficiency in production, automakers invest a large amount of time
and money into developing and improving the manufacturing process, and rely heavily on research
and technological innovation.
Weakness

1. Japanese Car Makers Rally on Weak Yen
2. Europe Passport
3. High Maintenance cost with Japanese vehicle.
4. High Energy Price.
Opportunity
1. Increasing fuel price:- Japan Automobile industry fuel-efficient cars with hybrid, hydrogen or
electrical engines. Increasing fossil fuel prices encourages the consumers to buy such cars and
Japan Automobile industry is already in position to offer many car models with various
environment friendly engines.
2. Global Demand for the Environment friendly Vehicle: Increasingly stringent environmental
regulation in Market is spurring automakers to develop a new generation of green car.
3. Most of the Japanese company are in the way to production and some have producer the Hybrids,
zero carbon emission vehicle into the mainstream.
4. Demand of Tricity :- It a three wheeler Bike which is more creating more demand in Japanese
market. Is for those people who are not comfortable with two Wheeler.
5. Demand of Electric Car:- Japanese electric car have more demand in domestic level as well as world
level
6. Toyota leaf( Electric car)- Top selling car in 125,000 unit at world level (July 2014)
Threats
1. Natural disaster:- The business has manufacturing facilities in Japan. And are often subject to
natural disasters that disrupt manufacturing processes and results in lower production volumes and
losses.
2. Appreciating yen exchange rate:- In the Japan Automobile industry more revenue comes from
foreign countries. Appreciating yen exchange rate against other currencies means lower profits for
the company.

3. Raising raw material price:- Rising prices for raw metals will lift the costs for auto manufacturers
and result in squeezed profits
4. Hyundai-Kia, gaining market share all around the world in the small-vehicle market.
http://jama.org/japan-auto-industry-data/current-statistics/
http://www.newsonjapan.com/autos/
.Research Methodology
Research methodology is the arrangement of condition for collection and analysis of data in a manner that
aims to combine the relevance to the industry and company. Research is conceptual structure within which
research is conducted. It is way to systematically study and solve the problems.
Software Used
 Microsoft word

 Microsoft Excel
Data collection
 Primary data
 Secondary data
In my project I am using the secondary data for research on Japan automobile industry.
 Various publications in form of annual reports, various papers
 News
 Company website
 JAMA website
1- At domestic level Japanese Motorcycle Production in 2013

Unit
141,800
173,319
173,918
72,651
1,481
Honda
Suzuki
Yamaha
Kawasaki
Others
At the pie chart showing that largest motorcycle producer at the domestic level is Yamaha company and
second position Suzuki motor third Honda.
2- Total Sale of Japan vehicle 2013.
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
2,187,305
Sale
5,279 360,667
Car Truck Buses
Sale
Total sale of vehicle at Japanese market are Car due to the new innovation and R&D in this sector.
3- Total Sale in 2014 (January - May)

2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
2,187,305
Sale
5,279
360,667
Car Truck Buses
Sale
In the 2014 within five month the sale of the Japanese Car are creating more demand
4- Position of Japanese car manufacturing company at world Level.
10,000,000
9,000,000
8,000,000
7,000,000
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
0
http://en.wikipedia.org/wiki/Automotive_industry_in_Japan
Series1
Top ten Car Manufacturer At the world level, four are from the Japan which are Toyota, Honda, Nissan,
Suzuki.

5- Position of Japanese Automobile at the world level
S. no Country/Region Total unit
1 China 22,116,825
2 United States 11,045,902
3 Japan 9,630,070
4 Germany 5,718,222
5 South Korea 4,521,429
6 India 3,880,938
7 Brazil 3,740,418
8 Mexico 3,052,395
9 Thailand 2,532,577
10 Canada 2,379,806
In Automobile industry in term of total unit production Japan Automobile industry is at the third
position.
Factor which Are Affecting the Automobile Sector
1. Auto industry observers cite car loans as the biggest driving factor for the expansion of the
Compact Car segment. At present, almost 85 per cent of all new car sales are backed by auto
finance. Interest rates on car loans have come down.
2. Price can be other factor which is affecting the expansion of automobile sector and completion
among the competitor.
3. The income of the consumer or buyer of the car is a very important if any consumer has the 100cc
bike/car due to the income or test consumer moves toward the more than 100cc.
4. Car sales increase when a new model hits the market. Due to escalation in competition in car
market, frequency of new model launches has increased.
Review of Literature
www.yahoo.co.uk
www.autoindustry.co.uk

www.toyota.com
http://www.scribd.com/
www.honda.com
http://www.autonews.com/
www.nissan.com
www.mitsubishi.com
http://www.newsonjapan.com/autos/
Conclusion
Automobile industry is growing not only in Japan even all over the world. Japanese Automobile brand are popular in
the domestic level and in other country. Toyota, Honda, Suzuki are the major car producer in Japan. Automobile
company of Japan have bright future in upcoming year because they have the better solution, if we talk about the
environment friendly vehicle they have LEAF, Which is more selling car all over the world.

Japan Automobile Industry

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