Japan is known as the Land of the Rising Sun. But you would be forgiven if you believed that the light of that sun was being generated by a massive array of LED lights.
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Japan’s reputation for being a massive industrial powerhouse is well deserved. In particular, Japan’s automotive industry is world renowned as a cradle of innovation for design, manufacturing and development of stunning motor vehicles.
The automotive industry in Japan was originally a government planned project. In the era just after World War I, the Imperial Army started farming out small manufacturing projects for military vehicles to small companies. In 1933, Nihon Sangyo Corporation, a real estate holding company established their automotive division, the company now known as Nissan.
Later in that same year, a weaving machine maker, Toyota Jido Shokki, which later became Toyota, founded its automotive department. But the automotive industry as a whole was tiny until 1950. In that year, post-war restrictions barring automobile manufacturing were lifted. Up until then, the industry had produced mostly industrial trucks, buses and military vehicles.
An important fact to remember is there was little to no domestic demand for personal automobiles in Japan until the 1950s. Other than for the wealthy, car ownership wasn’t really an option. Japan had low per capita incomes, and was still largely an agricultural society.
However, with a booming post-war economy, and more urbanization, came the need for personal transportation. Today, Japan is ranked 16th in the world in per capita vehicles on the road, with 591 vehicles per 1,000 people (2014). But overall, Japan has more than 60,668,000 vehicles in operation as of 2015, which makes it the third largest automotive market in the world, behind the United States (258 million VIO) and China (120 million VIO). Today, approximately 5.3 million people are employed in Japan’s automotive industry, representing nearly 8 percent of the entire Japanese workforce.
Japan’s automotive market is dominated by Japanese vehicles. Based on full year 2015 sales, Toyota was the dominant brand in the market, with a 28.7 percent market share. Sales for Toyota fell 4 percent from 2014, but the market was down an overall 9 percent from 5,562,000 units sold in 2014 to 5,045,000 in 2015. Toyota improved market share by 1.5 percentage points from 2014. Honda (14.4 percent), Suzuki (12.6 percent), Daihatsu (12.1 percent) and Nissan (11.7 percent) made up the top 5 brands in 2015, all with slightly lower market share totals than from 2014. The only foreign nameplate to break the top 10 brands was Mercedes (Germany), with a 1.3 percent share of the market.