[Biz View] Japanese Consumers Choosing Toyota and Nissan for Imported Cars... Is It Different for Eco-Friendly Vehicles?

Dominance of Domestic Brands in Japan's Imported Car Market
Thailand Ranks 2nd in Imported Cars After Germany
Automotive Industry Development and Local Maker Infrastructure Increase
Hyundai Reenters After 12 Years with New Strategies in Online, Eco-friendly Cars, and Car Sharing

Akio Toyoda, President of Toyota Motor Corporation Japan, announced the electrification strategy in Tokyo last December.

[Asia Economy Reporter Choi Dae-yeol] According to the Japan Automobile Dealers Association, about 2.8 million new cars were sold in Japan last year. Among these, imported cars slightly exceeded 340,000 units, accounting for roughly 12%. This seems not much different from South Korea, where imported cars make up about 20% of annual new car sales.

However, the Japanese statistics include vehicles made overseas by Japanese brands and then imported. The high-performance Toyota GR Supra is a typical example. Initially, at its launch, it was produced in Aichi Prefecture, where Toyota's headquarters and factory are located, but production later moved to Shizuoka Prefecture. From the fifth-generation model released in 2019, it has been manufactured at Magna Steyr in Austria. Magna Steyr is a subsidiary of the automotive parts company Magna and frequently undertakes contract manufacturing for premium brands like Mercedes-Benz and BMW.

Toyota's high-performance vehicle GR Supra

In addition, there are considerable sales of vehicles from domestic brands such as Nissan, Mitsubishi, and Honda that are produced in foreign factories and imported. Germany was the largest source of car imports to Japan last year, followed by Thailand. Thailand hosts a concentration of Japanese complete car factories. According to data from the Japan Automobile Importers Association, the top imported car brand in Japan last month was Mercedes-Benz, followed by Nissan and Toyota. About 30% of imported cars were domestic brands.

In fact, this preference of Japanese consumers for domestic makers is a natural phenomenon upon closer examination. Purchasing a car is not simply buying an expensive manufactured product with a one-time payment; it involves continuous maintenance and follow-up expenses over several years. Considering this, consumers are inevitably driven toward economical choices. There are also diverse options. Centered on Toyota, the world's largest producer and seller, each maker has built its brand identity with its own direction.

According to Japan's Ministry of Economy, Trade and Industry, including motorcycles and parts, the automotive industry accounts for 18.6% of manufacturing (as of 2019), supporting the vast Japanese economy. It also leads other industries in facility investment and research and development investment. This shows that despite the already high level of Japanese automotive technology and production capacity, continuous refinement and improvement are ongoing.

In front of Nissan Headquarters, Yokohama, Japan

Foreign Makers Face a Graveyard as Youth Demand for New Cars Declines
Online Sales Network Established to Reduce Costs of Sales and Maintenance Networks
First Attempt at Sales Linked with Vehicle Sharing Platforms

Given these conditions, it is generally considered difficult for foreign makers to break into the market. Japan once had annual new car registrations exceeding 5 million, but the market has shrunk as younger generations are less active in purchasing new cars, which also discourages entry.

Hyundai entered the local market in the early 2000s but withdrew in less than ten years. Due to tariffs, price competition was difficult, and it was evaluated that Hyundai lacked competitiveness compared to local brands in the popular kei cars and small to mid-sized segments. In imported mid-to-large segments, German premium brands dominated.

This time, Hyundai announced its re-entry after 12 years with three main strategies. First, the lineup focuses on eco-friendly vehicles such as the best-selling hydrogen fuel cell vehicle Nexo and the Ioniq 5, the first dedicated electric vehicle that has received favorable reviews in Europe and the U.S. Japan has traditionally had many hybrids based on internal combustion engines with added motors, but pure electric vehicles have lagged behind. As of last month, pure electric and hydrogen vehicles accounted for only 1% of sales. With the electric and hydrogen vehicle market just taking its first steps, Hyundai judged that it is starting on a similar footing as other brands.

Kato Shigeaki, Head of Passenger Car Business at Hyundai Mobility Japan, is making a presentation at a briefing held in Tokyo on the 8th (local time).

Second, the entire process from new car contract to payment and delivery will be conducted online. Previously, establishing a new car sales network required infrastructure such as local sales and maintenance networks because vehicle management after sale is important. Electric vehicles have fewer parts than internal combustion engines and significantly reduced maintenance demand.

This means cost reduction is possible for the business. Hyundai plans to respond by establishing customer experience centers in major regions nationwide, starting with Yokohama. Additionally, it will introduce for the first time a sales method linked with car-sharing and vehicle-sharing platforms. Hyundai partnered with DNA Sompo Mobility, known for the Anyca service, based on the judgment that demand for vehicle-sharing services is high among younger generations. Other foreign brands are closely watching Hyundai's decision because it is still difficult to predict the outcome of this new approach.

This content was produced with the assistance of AI translation services.