Japan’s auto industry to shrink by the end of the decade image

The Japanese automotive industry is the home of too many automakers at the moment, and it is likely to close its ranks by 2020, analysts say.

Japan is the home of more automakers than Germany or United States have, with eight independent global players being involved in the automotive industry. Alongside the world’s biggest maker by sales Toyota, there is also Nissan Motor, Honda, Mazda, Mitsubishi, Subaru, Suzuki and Daihatsu. But it is apparently high time to close ranks, analysts believe, as the automakers are facing higher costs while building safer, cleaner cars, that are also packed with lots of new technologies. And Toyota’s deal of buying out the rest of the Daihatsu unit might be the start of a more relaxed Japanese auto industry, according to Takaki Nakanishi, a Jefferies Group LLC analyst, cited by Bloomberg. He stated that a healthier industry would fit only two or three major auto groups. “To have one or two carmakers in a country is not only natural, but also helpful to their competitiveness,” Nakanishi said in an interview. “Japan has just too many and the resources have been too spread out. It’s a natural trend to consolidate and reduce some of the wasted resources.”

The Daihatsu deal is reducing Japan’s car companies down to seven, but they could easy remain six soon, as Toyota is also rumored to be in talks with Suzuki for a possible partnership. And it is unlikely that the smaller domestic carmakers will all remain independent in the near future, as development costs are getting higher and higher. Only Honda, Mazda Motor and Mitsubishi are on their own for now, despite the fact they cannot match Toyota’s financial power.

Via Bloomberg