Automotive Aftermarket in Japan: Key Research Findings 2019

Automotive Aftermarket in 2018 Attained 19,649 billion yen, Slightly Increased from Previous Year

Used Car/Auto Repair Equipment/Repair Business show Slight Increase: Invigorated by Sharing Economy, Growth Accelerated in the Rental Market

Yano Research Institute (the President, Takashi Mizukoshi) has conducted a survey on the Automotive Aftermarket, and has found out the market trends by product segments, the trends of market players, and the future perspective.

Automotive Aftermarket Size Transition
Automotive Aftermarket Size Transition

Market Overview

The size of the Automotive Aftermarket in 2018 is estimated to attain 19,649 billion yen. In the new cars market, the starting point of the automotive distribution, the demand continued to remain at a high level mainly on the mini vehicles. *1 With the hybrid electric vehicles (HEV) and new vehicles loaded with technologies such as the Advanced Emergency Braking System, the enhanced product portfolio boosted the demand for replacement, resulting in 5.27 million cars sold in 2018. *1 (*1 Source: Japan Automobile Dealers Association and Japan Mini Vehicles Association)

With the strong sales in the new car market and the trend of long-term use of each vehicle, the total number of four-wheeled vehicles owned reached a record of 78.27 million cars. *2 However, the total number of vehicles owned is forecasted to start decreasing soon, against the backdrop of the aging in the middle-aged generation who had been the main customer base, the decrease in the population of young generation who was expected to lead the demand of car sales, and the lifestyle among young people that finds less value in the ownership of goods. (*2 Source: Ministry of Land, Infrastructure, Transport and Tourism)

Confronting decrease in the total number of vehicles, automotive distributers and related business players are focusing mainly on two business strategies to strengthen their business. One is to improve customer loyalty for increasing the sales per customer. This can be done by keeping in touch with customers by means of offering the car lease or auto loan with prearranged trade-in price in the sales division, while at the same time expanding total sales in the service division by providing the packaged maintenance service, which includes periodic checkups and vehicle inspection. The other strategy is business diversification. As it is becoming increasingly difficult to maintain the current business size solely by the mainstream business, more business players are launching new business to complement the sales in the mainstream business. In recent years, as the car rental market continues growing spurred by the sharing economy, the market players in car sales, auto-accessory sales, auto care services, and gas sales are expanding into the rental business, one after another.

Noteworthy Topics

Export of the Used Cars reached a Record Sale of 1.327 million cars

Since the brand value is well corroborated with the product quality assured by Japanese automotive manufacturers, and the good state of each cars maintained by the system such as periodic vehicle inspection, worldwide demand for the Japanese used cars is high. The statistics by the Ministry of Finance shows that the number of Japanese cars exported in 2018 reached 1.327 million units. 

A growing trend is the emerging markets, such as countries in Africa (e.g. South Africa, Kenya, Tanzania, etc.), dominating the top 10 export destinations. Driven by price hikes of crude oil and raw materials, demand in the resource-rich countries continued to grow especially in 2018. The main procurement route for the exported vehicles is the wholesale market such as the auto-auction. In 2018, the number of cars traded in the auto auction reached 4.787 million units, led by the demand for export.*3 While the number of cars for the auctions (supply) is leveling off, the cars sold through the auctions are increasing, raising both the contract price and the rate of reaching successful contract agreement. *3 (*3 Source: Used-Car Co., Ltd.)

Under such circumstances, the number of major auto distributers starting overseas business are increasing each year, by hosting the own auction, developing the sales channels, and starting the auto care business. In addition to the two business strategies to minimize decreasing domestic distribution (customer loyalty/diversification), overseas business is crucial from the perspective of business growth. Current boom of the used car export increases the importance of developing overseas business further.

Future Outlook

In 2019, the number of new car sales is likely to increase slightly compared to the previous year. Although the consumption tax will be raised in October 2019, as various measures, such as abolition of automobile acquisition tax and discount in automobile tax, are to be taken to minimize last-minute surge in demand followed by sudden downturn ahead of the consumption tax hike, the impact of the tax raise is assumed to have minor effect compared to the past consumption tax hike. 

Since the replacement demand for new cars is the starting point of used-car distribution, the linked businesses such as used car sales, auto-accessory sales, and auto care (maintenance) is also forecasted to increase slightly in 2019.  Although the number of cars in the auto auctions is expected to increase due to the increased number of used cars, as the demand for used-car export is also growing, the competition in the bid for obtaining good-quality cars will intensify more.  Meanwhile, the car rental market is forecasted to keep on growing.  Led by the full-scale growth in the auto-lease for individuals, growing demand in the car rental by rapidly increasing visitors from overseas, and the car sharing and subscription services once again drawing great deal of attention as the automotive makers launching the services in full-scale, the rental car business market will continue to expand as a high-growth market.

Research Outline

1.Research Period: April 2018 to March 2019
2.Research Object: Companies, organizations, and competent authorities regarding the Automotive Aftermarket
3.Research Methogology: Face-to-face interviews by the expert researchers, survey via telephone and email, and literature research.

Automotive Aftermarket in Japan

Automotive Aftermarket in this research refers to all kinds of businesses provided after the sales of new cars, including the following 5 categories: (1) Used-car business (used car sales, used-car export, used-car purchasing, auto-auction), (2) Automobile leasing business (auto-lease, rental cars, car sharing), (3) Auto parts, Accessories, and Supplies (auto parts, repair parts, recycled parts (used/rebuilt), (4) Auto Care (Maintenance)  (auto care and vehicle inspection equipments), and (5) Additional services (car insurance, road service). 

Statistical data from the following organizations are used as a source for estimating the size of each market:  Japan Auto Parts Industries Associations (car repair parts), Japan Automobile Service Promotion Association (car maintenance), Japan Automotive Service Equipment Association (vehicle inspection equipment), The General Insurance Association of Japan (car insurance), and Japan Automobile Federation (road service). 

<Products and Services in the Market>

New cars, used cars, used-car export, auto auction, bidding, auto-lease, auto-lease for individuals, maintenance lease, finance lease, rental car, car sharing, subscription service, car parts, tire, aluminum wheel, car audio device, car navigation system, drive recorder, car accessories, oil/chemical products, consumable supplies, functional products, dress-up products, car-tuning products, genuine parts, JAPA recommended parts (JAPA: Japan Automotive Parts Association), repair parts, recycled parts, reused parts, rebuilt parts, car maintenance, vehicle inspection, periodic checkup and inspection, auto-repair shops, packaged car maintenance plans, car inspection equipments, car insurance, compulsory automobile liability insurance, voluntary insurance, direct non-life insurance, road services, gasoline, self-service fueling, customer management systems for car maintenance service shops.

Published Report

Contact Us

©2019 Yano Research Institute Ltd. All Rights Reserved.
The copyright and all other rights pertaining to this report belong to Yano Research Institute.
Please contact our PR team when quoting the report contents for the purpose other than media coverage.
Depending on the purpose of using our report, we may ask you to present your sentences for confirmation beforehand.