The Nature of Japan’s Auto Market

The Japanese auto market is highly competitive. Since 1978, Japan has had zero tariffs on cars, trucks and auto parts. There are no restrictive customs or regulations applied to the import and sale of foreign-made vehicles in Japan.

Smaller (compact) models of up to 2,000cc in engine capacity are the mainstay of Japan’s passenger car market. European automakers have introduced models in a targeted response to the demands of Japanese consumers for energy-efficient and environmentally friendly models. Since 1995, the share of European vehicles in Japan’s home market has steadily increased.

In contrast, the share of U.S. vehicles has decreased over the same period. Furthermore, the number of dealerships in Japan selling European vehicles has steadily increased while the number of dealerships selling U.S. vehicles has steadily decreased. European automakers outspend U.S. automakers 14 to 1 in product promotion in Japan via advertising in all media.

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