Challenges to and Reorganization of the Japanese Automobile Industry in the 21st Century

This paper describes the current state of the Japanese automobile industry and the strategies of Japanese carmakers for survival in a newly competitive environment. The landscape of Japanese automobile industry has deeply changed in the past decade. The main factors affecting the behavior and strategy of carmakers are the long stagnation of the Japanese economy, the globalized fierce market competition, the bankruptcy of General Motors, and the environmental issues, without saying the difference of carmakers in their competitive edge. So, at first, we discuss the evolutional path of carmakers from 1995 to 2007, and the fact that the long stagnation of the Japanese economy compelled carmakers to develop an external growth strategy. Second, we show the regrouping of Japanese carmakers and their alliances with foreign carmakers the financial crisis of American carmakers and the environmental issues have provoked. Third, we explain the Japanese firms’ strategies to cope with environmental issues and globalized competition, focusing our discussions on the industrial war for the ‘de fact’ standard of future cars: hybrid vs. electric vehicles, and on their difficult operations in the new emerging markets: China, India, etc., as well as the difficulties Toyota faces in 2009-2010.