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Japan auto show returns, as industry faces EV turning point

Creator: Qilai Shen

Tokyo’s auto show has returned after a four-year absence and has been renamed for the age of electric vehicles. This marketing makeover may be more indicative of industry goals than the trailing battery-powered lineup from Japanese automakers.

The start of the Japan Mobility Show on Thursday will be a turning point for the local market. The top-selling manufacturer in the world, Toyota (7203.T), announced a strategy shift to battery electric vehicles this year. This included ambitions to commercialize improved batteries and utilize die-casting technology developed by Tesla (TSLA.O).

Toyota’s change has lessened criticism that adopting battery electric vehicles took too long. The situation is worse for some of its smaller competitors, including Subaru (7270.T), Mazda (7261.T), and Mitsubishi Motors (7211.T), which may have a harder time introducing EVs, according to experts.

Only three international automakers will showcase vehicles at the show, including Mercedes (MBGn.DE), BMW, and China’s largest carmaker BYD (1211. HK). BYD will be the first Chinese automaker to do so.

Furthermore, all foreign manufacturers will demonstrate battery EVs that are in production now or will be soon, unlike many Japanese businesses that will only be showcasing concept cars.

According to Koji Endo, head of equities research at SBI Securities, there appears to be a “growing gap” between Japan’s better automakers, including Toyota and Honda (7267.T), posting record profits, and the country’s lesser competitors.

High input prices and declining sales in China are also putting pressure on Japan’s car sector. Japanese companies like Nissan (7201.T) and Mitsubishi, who allegedly planned to stop manufacturing there, have been hurt harder than non-Chinese manufacturers.

At the exhibition, Toyota will present several concept vehicles driven by batteries, including a sport utility vehicle, a mid-size pickup truck, and a sports car.

The largest carmaker in the world by sales has long pushed for a multi-pronged strategy to cut carbon emissions, including alternatives to battery EVs and other electrified and renewable energy sources.

The business will display updated versions of the plug-in hybrid and hybrid Century and Crown series cars that were previously introduced.

In addition to new battery EV concept cars, such as a luxurious minivan, Nissan wants to showcase its battery-powered Ariya, Leaf, and Sakura models.

DECLINE IN THE HOME MARKET

In 2021, the biannual show was postponed due to the pandemic. This year, various mobility technologies, including driverless vehicles, motorcycles, trucks, and so-called “flying cars,” will be displayed.

A rapidly aging and falling population, which has fewer young people to buy automobiles, is exerting increasing pressure on Japanese manufacturers despite their efforts to appeal to a larger audience.

According to statistics from the Japan Automobile Manufacturers Association that date back to 1993, new registrations for passenger automobiles last year reached their lowest yearly level on record. To 3.4 million automobiles, registrations fell 6.2% from the previous year in 2022.

According to government statistics, 124 million people in Japan were 65 or older as of May 1. The number of new cars sold in 2017 remained below 4 million for the third year despite the effects of a post-pandemic chip shortage that affected vehicle supply and production.

Data from the ASEAN Automotive Federation reveals that the car market in Southeast Asia has been expanding, in contrast to the deteriorating picture in Japan.

According to the research, passenger car sales in seven Southeast Asian nations increased by 24% year over year to 2.2 million in 2022. However, Japanese automakers compete with Chinese EV startups for market dominance in important areas like Thailand.

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