Ford’s CEO, Alan Mulally, referred to Japan as, “the world’s most closed market for auto makers”. According to Automotive news domestic sales are 90% of the market. This means that automotive companies will have to struggle for the last few percentage points of the market share.
Recently companies have had success there (or at least more success). Specifically two companies have had increasing profits for the last few quarters: Maserati and VW. They have their best sales in the country since 1997. Maserati has doubled their volume in one year. This says something about the economy of Japan. When they can afford double the volume of a car that starts over $200k it demonstrates a significant increase in purchasing power. Even Mercedes-Benz has increased presence in the country, surpassing Lexus as the country’s most popular luxury brand.
How is Japan able to afford all these new luxury cars? The government was finally able to stop their 15 years of deflation by buying double the number of bonds last year. Automotive News states that, “Import car sales generally expand more in good economic cycles and shrink faster when economy goes down,”. With increasing numbers of women joining the workforce in Japan, we will probably see increasing gains in the Nikkei (Their version of the S&P 500). If the Japanese economy continues to grow then I believe the presence of foreign automobiles will increase in the next few years, especially these luxury brands.