Autoparts & Aftermarket Japan 2009
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Market Brief AutoParts & AfterMarket Japan 2009
Japan Automotive Aftermarket • Japan, accounts for 10% of the world’s total of app. 700 million motor vehicles currently in use • 75.9 million registered motor vehicles in Japan (57.1m cars, 16.7m trucks, 1.6m SV, 230,000 buses) • according the Japan Auto Parts Association, the size of the auto parts, accessories, and chemicals aftermarket is 7,987 billion yen ($73 billion) in 2007 (up 6.4 percent from 7,070 billion yen in 2006) • although foreign firms face stiff competition in this market, there are significant opportunities in areas such as sports performance parts, aluminium wheels, shock absorbers, and new technologies such as parts used for intelligent transportation systems. The 3 key themes affecting Japan’s auto parts and accessories aftermarket are: • the average lifespan of a vehicle; • average vehicle mileage, and • the level of quality of new automobiles Generally, the average vehicle lifespan in Japan is shorter than in the United States or Europe. The average vehicle mileage is also less than in the United States and Europe. Furthermore, the quality of motor vehicles in Japan is very high. With more frequent turnover and lower mileage, demand for replacement auto parts and accessories per vehicle is considerably less than in the United States and Europe. A fair number of foreign manufacturers (e.g., wiper blades, shock absorbers, spark plugs, window wipers, air filters, other) have used this approach successfully.
2
Market Size In Japan, there are: • 28,000 licensed dealer repair shops and appr. 90,000 independent repair garages • Japan's computerized auto parts & accessories distribution database called "Tsubasa.“, a system used by circa 95% repair garages to identify the appropriate parts for a car undergoing repair • 60,000 gas stations that sell wipers, tires, auto chemicals and additives • several mass-merchandisers (chains)
Import Market Local Production Exports Total Market
2007 Import Market Share for the United States and Selected Foreign Countries U.S.: China: Germany: Thailand: Philippine:
11.8% 21.7% 10.2% 8.9% 6.9%
Others: Total:
40.5% 100%
Source: Japan Auto Parts Industry Association (JAPIA)
Japan's Market for Auto Parts (In Millions of USD) JFY 2005 JFY2006 JFY 2007 (Estimated) 9,778 10,345 11,622 169,988 193,986 199,806 53,105 47,781 51,533 126,661 156,550 159,895
Est. Avg. Annual Real Growth 3% ----
Source: Japan Auto Parts Industry Association (JAPIA) and CS Tokyo estimates; Future Inflation Rate Assumed: 1%
3
Main Distribution Channels 1. 2. 3. 4. 5.
auto makers auto parts makers wholesalers, and jobbers (secondary wholesalers) gas stations and tire stores mass merchandisers
In Japan, foreign auto parts and accessories are primarily distributed through channels 3 through 5, i.e., not through manufacturers. > Auto Makers: All types of genuine auto parts and accessories (OES) are distributed through this channel via Japanese automakers, their own wholesale companies ("Buhan Kyohan"), and car dealers. > Auto Parts Makers: Auto parts manufacturers, such as air-conditioning and brake parts suppliers, have established their own distribution networks to supply their products to "Buhan Kyohan' and car dealers. > Wholesalers and Jobbers: Non-genuine auto parts can be distributed through this traditional wholesale channel (which includes members of the Japan Auto Parts Association) (JAPA), and through jobbers (secondary wholesalers), and independent garages. > Gas Stations: There are 60,000 gas stations that sell wipers, tires, auto chemicals and additives. > Mass Merchandisers: New mass merchandisers, such as the "Autobacs Seven" and "Yellow Hat" retail stores, are becoming very popular in Japan. As "specialized/full certified garages," 300 of the 550 Autobacs Seven stores can conduct critical parts repairs at their respective stores. Yellow Hat is primarily a merchandiser of tires, wheels, electronics equipment and auto chemicals and additives. In general, such mass merchandisers are receptive to carrying imported auto parts that offer high quality at a competitive price.
4
Market Access & Entry Licensed repair facilities are the primary retail outlets for auto parts and they sell most kinds of parts. Affiliation and parts sourcing distinguish two categories of repair facilities in the aftermarket distribution network: dealer repair shops and independent repair garages. Although both of these are licensed repair facilities, they have different sources of parts, accessories, and materials. A description of each follows.
Dealer Repair Shops – These sites procure over 90 percent of their parts and materials from manufacturer affiliated wholesalers. Therefore, they are not major users of non-genuine parts. There were approximately 28,000 licensed dealer repair shops in June 2006. There were also close to 89,000 independent repair garages at that time. Independent Repair Garages – These garages procure parts and accessories from both car manufacturer wholesalers and local independent wholesalers. The variety of products they procure matches that of dealer repair shops except that each independent garage needs frequent deliveries of small lots of parts and accessories for various car makes and models because of the variety of cars which they service. Independent wholesalers perform a vital coordinating function for independent garages, delivering different model parts and accessories up to four times per day. These garages mainly use non-genuine parts and fast-moving, frequently replaced parts such as shock absorbers, spark plugs, and fan belts. For the most part, independent wholesalers distribute non-genuine products.
5
Market Prospects In the engine category, easily replaced products such as air filters, oil filters, and spark plugs offer possibilities provided that the products have superior functionality and/or an exclusive brand name, which their Japanese counterparts do not have. In the chassis and drive train parts category, non-durable parts and components such as clutch disks, facings, pads, brake hoses, etc., are good markets for foreign suppliers. Price is a major consideration for independently licensed garages, while brand and functional superiority are the major considerations for independent auto shops. In the body parts category, parts such as wiper blades – with relatively few specification differences by car make – offer good opportunities for foreign suppliers. Ease of replacement, price competitiveness, and brand image are key factors. In the electrical and electronic parts category, the market for non-durable and sporty accessories holds promise. The accessories category is expected to expand, including onboard telecommunications systems and safety related devices. The market for convenience and luxury accessories is also expanding, although the product lifecycle is generally very short. With these considerations in mind, it’s interesting to note certain examples of past successes for foreign suppliers: 1) fog lamps
6
2) auto care chemicals (wax)
3) rust proofing solutions.
Market Requirenments In general, entry into the market requires: 1) 2) 3) 4) 5)
Products of high quality backed by superior engineering and an attention to detail; Superior image in the marketplace; Presence of top quality personnel in the market for marketing and after sales service; An emphasis on product packaging; A long-term commitment to the market by the company (including in-country R & D and/or manufacturing facilities in some cases).
In addition, a successful track record selling to a Japanese auto manufacturers' "transplant" auto assembly facility in the U.S. is very helpful in penetrating the original equipment distribution channel in Japan. Independent local wholesalers require their foreign suppliers to provide • • • •
consistent high quality specifications in Japanese appealing packaging and above all, compatibility with Japanese specifications and sizes so no modification is required.
In the past, this has been a problem with some foreign importers, but as foreign companies have gained increased knowledge of Japanese customer requirements, this problem has for the most part disappeared.
7
Few key points in regards to Japanese customers • Extreme focus on quality and on customer service (you will find the biggest claim rate worldwide in Japan)
• Need to show long term committement to Japan • Excellent distribution and service network a must • Some adaption to the Japanese market often required • Extreme need and request for technical information and documentation • Close and frequent communication to partner and customers necessary to maintain well-working longterm relations • Focus hard on hiring top people (a pool of very talented Japanese are available if you screen carefully). Use recruiting agencies and headhunters rather than printed or internet ads • OK to take a premium price still, although the market is becoming more competitive
8
What we can offer to increase your sales in Japan ...
Professional Japan Business Development: • • • • • • • •
9
market research & marketing intelligence sales partner sourcing & partner negotiation marketing & direct sales logistics & import services e-commerce & web development start-up coordination & turn-around management HR recruiting & interim management firm representation & PR management
Japan Business Solutions
Japan Automotive Aftermarket • Japan, accounts for 10% of the world’s total of app. 700 million motor vehicles currently in use • 75.9 million registered motor vehicles in Japan (57.1m cars, 16.7m trucks, 1.6m SV, 230,000 buses) • according the Japan Auto Parts Association, the size of the auto parts, accessories, and chemicals aftermarket is 7,987 billion yen ($73 billion) in 2007 (up 6.4 percent from 7,070 billion yen in 2006) • although foreign firms face stiff competition in this market, there are significant opportunities in areas such as sports performance parts, aluminium wheels, shock absorbers, and new technologies such as parts used for intelligent transportation systems. The 3 key themes affecting Japan’s auto parts and accessories aftermarket are: • the average lifespan of a vehicle; • average vehicle mileage, and • the level of quality of new automobiles Generally, the average vehicle lifespan in Japan is shorter than in the United States or Europe. The average vehicle mileage is also less than in the United States and Europe. Furthermore, the quality of motor vehicles in Japan is very high. With more frequent turnover and lower mileage, demand for replacement auto parts and accessories per vehicle is considerably less than in the United States and Europe. A fair number of foreign manufacturers (e.g., wiper blades, shock absorbers, spark plugs, window wipers, air filters, other) have used this approach successfully.
2
Market Size In Japan, there are: • 28,000 licensed dealer repair shops and appr. 90,000 independent repair garages • Japan's computerized auto parts & accessories distribution database called "Tsubasa.“, a system used by circa 95% repair garages to identify the appropriate parts for a car undergoing repair • 60,000 gas stations that sell wipers, tires, auto chemicals and additives • several mass-merchandisers (chains)
Import Market Local Production Exports Total Market
2007 Import Market Share for the United States and Selected Foreign Countries U.S.: China: Germany: Thailand: Philippine:
11.8% 21.7% 10.2% 8.9% 6.9%
Others: Total:
40.5% 100%
Source: Japan Auto Parts Industry Association (JAPIA)
Japan's Market for Auto Parts (In Millions of USD) JFY 2005 JFY2006 JFY 2007 (Estimated) 9,778 10,345 11,622 169,988 193,986 199,806 53,105 47,781 51,533 126,661 156,550 159,895
Est. Avg. Annual Real Growth 3% ----
Source: Japan Auto Parts Industry Association (JAPIA) and CS Tokyo estimates; Future Inflation Rate Assumed: 1%
3
Main Distribution Channels 1. 2. 3. 4. 5.
auto makers auto parts makers wholesalers, and jobbers (secondary wholesalers) gas stations and tire stores mass merchandisers
In Japan, foreign auto parts and accessories are primarily distributed through channels 3 through 5, i.e., not through manufacturers. > Auto Makers: All types of genuine auto parts and accessories (OES) are distributed through this channel via Japanese automakers, their own wholesale companies ("Buhan Kyohan"), and car dealers. > Auto Parts Makers: Auto parts manufacturers, such as air-conditioning and brake parts suppliers, have established their own distribution networks to supply their products to "Buhan Kyohan' and car dealers. > Wholesalers and Jobbers: Non-genuine auto parts can be distributed through this traditional wholesale channel (which includes members of the Japan Auto Parts Association) (JAPA), and through jobbers (secondary wholesalers), and independent garages. > Gas Stations: There are 60,000 gas stations that sell wipers, tires, auto chemicals and additives. > Mass Merchandisers: New mass merchandisers, such as the "Autobacs Seven" and "Yellow Hat" retail stores, are becoming very popular in Japan. As "specialized/full certified garages," 300 of the 550 Autobacs Seven stores can conduct critical parts repairs at their respective stores. Yellow Hat is primarily a merchandiser of tires, wheels, electronics equipment and auto chemicals and additives. In general, such mass merchandisers are receptive to carrying imported auto parts that offer high quality at a competitive price.
4
Market Access & Entry Licensed repair facilities are the primary retail outlets for auto parts and they sell most kinds of parts. Affiliation and parts sourcing distinguish two categories of repair facilities in the aftermarket distribution network: dealer repair shops and independent repair garages. Although both of these are licensed repair facilities, they have different sources of parts, accessories, and materials. A description of each follows.
Dealer Repair Shops – These sites procure over 90 percent of their parts and materials from manufacturer affiliated wholesalers. Therefore, they are not major users of non-genuine parts. There were approximately 28,000 licensed dealer repair shops in June 2006. There were also close to 89,000 independent repair garages at that time. Independent Repair Garages – These garages procure parts and accessories from both car manufacturer wholesalers and local independent wholesalers. The variety of products they procure matches that of dealer repair shops except that each independent garage needs frequent deliveries of small lots of parts and accessories for various car makes and models because of the variety of cars which they service. Independent wholesalers perform a vital coordinating function for independent garages, delivering different model parts and accessories up to four times per day. These garages mainly use non-genuine parts and fast-moving, frequently replaced parts such as shock absorbers, spark plugs, and fan belts. For the most part, independent wholesalers distribute non-genuine products.
5
Market Prospects In the engine category, easily replaced products such as air filters, oil filters, and spark plugs offer possibilities provided that the products have superior functionality and/or an exclusive brand name, which their Japanese counterparts do not have. In the chassis and drive train parts category, non-durable parts and components such as clutch disks, facings, pads, brake hoses, etc., are good markets for foreign suppliers. Price is a major consideration for independently licensed garages, while brand and functional superiority are the major considerations for independent auto shops. In the body parts category, parts such as wiper blades – with relatively few specification differences by car make – offer good opportunities for foreign suppliers. Ease of replacement, price competitiveness, and brand image are key factors. In the electrical and electronic parts category, the market for non-durable and sporty accessories holds promise. The accessories category is expected to expand, including onboard telecommunications systems and safety related devices. The market for convenience and luxury accessories is also expanding, although the product lifecycle is generally very short. With these considerations in mind, it’s interesting to note certain examples of past successes for foreign suppliers: 1) fog lamps
6
2) auto care chemicals (wax)
3) rust proofing solutions.
Market Requirenments In general, entry into the market requires: 1) 2) 3) 4) 5)
Products of high quality backed by superior engineering and an attention to detail; Superior image in the marketplace; Presence of top quality personnel in the market for marketing and after sales service; An emphasis on product packaging; A long-term commitment to the market by the company (including in-country R & D and/or manufacturing facilities in some cases).
In addition, a successful track record selling to a Japanese auto manufacturers' "transplant" auto assembly facility in the U.S. is very helpful in penetrating the original equipment distribution channel in Japan. Independent local wholesalers require their foreign suppliers to provide • • • •
consistent high quality specifications in Japanese appealing packaging and above all, compatibility with Japanese specifications and sizes so no modification is required.
In the past, this has been a problem with some foreign importers, but as foreign companies have gained increased knowledge of Japanese customer requirements, this problem has for the most part disappeared.
7
Few key points in regards to Japanese customers • Extreme focus on quality and on customer service (you will find the biggest claim rate worldwide in Japan)
• Need to show long term committement to Japan • Excellent distribution and service network a must • Some adaption to the Japanese market often required • Extreme need and request for technical information and documentation • Close and frequent communication to partner and customers necessary to maintain well-working longterm relations • Focus hard on hiring top people (a pool of very talented Japanese are available if you screen carefully). Use recruiting agencies and headhunters rather than printed or internet ads • OK to take a premium price still, although the market is becoming more competitive
8
What we can offer to increase your sales in Japan ...
Professional Japan Business Development: • • • • • • • •
9
market research & marketing intelligence sales partner sourcing & partner negotiation marketing & direct sales logistics & import services e-commerce & web development start-up coordination & turn-around management HR recruiting & interim management firm representation & PR management
Japan Business Solutions
