U.S. aftermarket companies have hurdles to crack Japanese parts market

For many decades Americans turned to home grown automakers to satisfy their motoring needs, purchasing vehicles produced by the big three producers of Ford, General Motors and Chrysler. It wasn’t really until the 1970s that these manufacturers faced any real mass-market foreign competition with the rise of Japan’s motor manufacturing behemoths.

Japan had entered into car production soon after the end of World War II but for many years the American public viewed Japanese products as flimsy mass-produced junk. To counter this conception the fledgling car manufacturers Toyota and Honda set out to produce vehicles that would be preferred by consumers.

Their determination paid off and by 2003 Toyota’s profit margin was eight times higher than the industry average. In the 1980s, in contrast to U.S. rival vehicle manufacturers who were moving their production facilities overseas, Japanese automakers had started building large manufacturing plants in the U.S. At the present time Japan is the second largest car manufacturer in the world having recently been overtaken by China.

Japans home market for motor vehicles accounts for some 10 percent of the world total of vehicles in use, making it third in the worldwide automobile market. This breaks down into some 59 million cars, 18 million trucks and 2 million SVs.

 Because of its own very strong vehicle production base foreign companies face strong competition in the automotive aftermarket, but there are still significant opportunities in areas such as, alloy wheels, sports performance parts, shock absorbers and new technologies.

There are three main factors that affect Japan’s automotive aftermarket, these are:

• the average lifespan of a vehicle;

• average vehicle mileage;

• the level of quality of new vehicles.

In Japan the average lifespan of a motor vehicle is shorter than for a comparable vehicle in Europe or the U.S. lifespan for a U.S. vehicle is estimated at 10 to 15 years with the European lifespan standing at about 13 years. In contrast to this cars in Japan have an estimated life of about 10 years. 

Alongside this the average vehicle mileage is less than for U.S. vehicles and the quality of motor vehicles manufactured in Japan is very high. These three factors combine to produce a very much lower demand for automotive replacement parts than for a comparable U.S. or European vehicle.

One area where demand stays constant is the supply of parts for vehicle servicing including wiper blades, shock absorbers, air and oil filters and spark plugs. Most Japanese car owners are very careful about the maintenance of their vehicles and will usually keep a full service history. To meet this demand for servicing there are some 28,000 licensed dealers and a further 90,000 independent repair garages. There are also over 60,000 gas stations that supply vehicle additives and chemicals, tires, wiper blades etc. The U.S. has a market share of 12 percent of the import market for aftermarket parts with China being the main importer.

Imported parts in Japan are usually distributed through wholesalers who are very often members of the Japan Auto Parts Association (JAPA) as well as through gas stations, independent garages, tire stores and mass merchandisers such as “Autobacs Seven” and “Yellow Hat” retail stores. These mass merchandisers are very receptive to selling quality, competitively priced imported auto parts and accessories such as tires, electronic equipment, chemicals and additives. A large proportion of the Autobacs Seven stores are “specialised / full certified garages” and can carry out critical parts repairs while the Yellow Hat stores are primarily a merchandiser of spare parts and accessories.  

Licensed repair facilities in Japan fall into two categories, dealer repair shops and independent repair garages. Of these, dealer repair shops source over 90 percent of their materials and parts from manufacturer affiliated wholesalers whereas the independent repair garages procure parts and accessories from both independent wholesalers and car manufacturer wholesalers. These independent garages use mostly fast moving, frequently replaced non-OEM parts such as spark plugs, fan belts, filters, tires and shock absorbers. These independent wholesalers provide a very important function for independent garages by giving frequent daily deliveries of replacement parts.

Success for a U.S. automotive aftermarket company in the American home market does not guarantee success in Japan. For foreign businesses and manufacturers wishing to break into the Japanese market certain factors have to be taken into account. Quality of production together with superior functionality of products is a major concern as is an exclusive brand name. Ease of replacement, competitiveness of price and brand image are also very important factors.

A successful history of selling products to U.S.-based Japanese automotive companies will help to ease a U.S. company’s entry into the very competitive Japanese automotive aftermarket. Independent wholesalers in Japan will require that certain provisos are met for prospective suppliers, these will include, specifications for products in Japanese, complete compatibility with original Japanese parts so that no modifications are necessary before fitting, very high consistent quality of parts, this is reflected in Japan having the highest worldwide claim rate on retro fitted parts and appealing packaging.

Other must haves are a long-term commitment to selling products in Japan, a high standard of service, an efficient distribution network for products, a very high focus on customer service and quality of products, the ability to provide documentation and technical information for your products, and lastly a willingness to keep in close communication with Japanese customers and partners. Linked to all of these conditions is the hiring of suitable Japanese staff within Japan to more ably promote your company and products in a very demanding, quality and image conscious market.

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