ABS/TCS/VDC Japan Mkt. Report - Excerpt

Japan ABS Market

Vehicle Production

In this report, Japanese vehicle production is divided into four segments, each having a different application rate for hydraulic ABS:

o Midget Vehicles - very low

o Standard Cars - medium to high

o Light Trucks - low to high

o Heavy Trucks and Buses - low

In 1996, Japanese companies produced 16 million vehicles: 2/3 in Japan (10.4 million) and 1/3 overseas (6 million).

In Japan 50% of production is Standard Cars and 28% is Light Trucks (Figure 1). A unique category is Midget Vehicles with 17% of production, or 1.7 million vehicles. The fastest growing segment is light trucks. Almost no midget vehicles are sold outside Japan.

Figure 1. Japan vehicle production by segment

Domestic consumption varies between 6.5-7.0 million vehicles, about 2/3 of production. Demand fell in 1997 due to an unpopular sales tax introduced in April. This Tax severely reduced domestic spending, whose repercussions included: bank failures, an alarming drop in the exchange rate of all SE Asian countries except Hong Kong, a liquidity crisis requiring unprecedented bailout from the World Bank, drop in the stock market. In December 1997 this tax was earmarked for deletion, which will buoy demand in 1998.

Exports in 1996 were 1/3 of production, or 3.4 million vehicles. In 1997, this figure rose to 5.1 million annual rate due to a decline in the value of the Yen. The peak year for exports was 1985 with 6.7 million new vehicles. Used vehicles also play a significant role in exports.

Compared with peak production, Japan operated at 76: capacity on average in 1996. Only Suzuki was at full capacity, in spite of having the highest ratio of offshore production, over 50%. In early 1997 capacity was strained due to rising exports and a surge in domestic demand prior to the sales tax.

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