Japan Custom-Car Market Overview

SEMA News—March 2014

INTERNATIONAL
By Jeff Kagawa

Japan Custom-Car Market Overview

	There are car shows around Japan every weekend of the year. Though the styles may vary from one event to another, there is no doubt that the country loves cars, and the influence from America is quite obvious.

Though Japan slipped from the number-three car consumer worldwide in 2011 to number five in 2012, love for automobiles remains very strong among the Japanese. Like Americans, the Japanese are holding on to their cars longer, which makes for a very interesting opportunity for the custom market. People have a desire to give their cars a facelift after a few years when they hold on to them, and that results in more sales for those engaged in the custom-car market. From swapping out wheels to updating headlights to modernizing the entertainment system, the aftermarket business in Japan is booming, and consumers continue to look for new products to enhance their driving experiences.

Custom-Car History

Japan’s custom-car market developed later than in the U.S., European and Australian markets, getting its start in the late ’70s. Young people began customizing their cars and motorcycles at that time and, like everywhere else in the world, customizing preceded government laws regulating the industry.

The style created by the Japanese is called “bosozoku,” where cars are lowered with extreme, handcrafted body kits that include flared fenders, front spoilers, rear wings and modified exhausts. Most were crafted locally due to a lack of parts, but aftermarket parts—mostly from the United States and Europe—began infiltrating the market in the years that followed. The culture of custom cars slowly began to emerge, and the Japanese government also began to relax its laws as it realized that the products were safe and also good for the economy.

Japan was introduced to the idea of customizing vans in the late ’80s via the American-made Chevy Astro van. Thousands of Astro vans were customized in Southern California and then shipped to Japan, where buyers eagerly awaited this latest craze. The Astros also had customized interiors, which was a brand-new concept at the time. These trends helped the Japanese create their own custom culture for vans and wagons, which is the largest market sector today.

There was a period in the ’90s when lowriders were a big hit. Again, most of the cars originated in Southern California and were shipped to Japan. The paint schemes, custom interiors and attention to detail were what caught the attention of Japanese car enthusiasts, and those influences are quite evident in today’s custom-car market.

The Japanese custom-car market is currently flourishing. It has segmented into various followings, such as super cars and VIPs influenced by Europe, musclecars and SUVs influenced by the United States, vans and wagons that draw their roots from the Astro van and, of course, tuning and the bosozoku are still popular.

Diablo Wheels entered the market with its initial advertisement in a Japanese car magazine in April 2008. Since then, the company’s products have been named “Wheel of the Year” by the readers of J-Lug magazine for four years in a row, from 2008 to 2011.

There are car shows around the country every weekend of the year. Though the styles may vary from one event to another, there is no doubt that Japan loves cars, and the influence from America is quite obvious. In fact, sometimes when you look at these cars, it is tough to believe that you’re actually in Japan.

Opportunities forU.S. Companies

American products are very highly regarded in Japan’s custom-car market, as the United States is seen as the pioneer of customization, and the Japanese follow U.S. trends and styles. Thousands of Japanese visitors come to the SEMA Show every year to look for new ideas, techniques and products to take home. U.S. products are viewed as fresh, innovative and of high quality. If that describes your product, you may have an opportunity in Japan.

Successful U.S. Companies in Japan

Diablo Wheels entered the market with its initial advertisement in a Japanese car magazine in April 2008. Since then, the company’s products have been named “Wheel of the Year” by the readers of J-Lug magazine for four years in a row, from 2008 to 2011. The company’s success can be attributed to having a sales and marketing plan in place prior to its advertisement.

Diablo Wheels also hired an independent Japanese consultant/sales rep to handle this specific territory and entered the game with an adequate budget. Diablo also sends an executive to Japan at least once per year and holds quarterly meetings with its distributor to ensure that everyone remains on the same page.

“Diablo has made modifications to our wheels in regards to quality, size, offset and PCD, all for the Japan market,” said Senior Vice President Jerry Lee. “The nice thing is that these modifications were made for Japan but are big sellers in other regions as well. The eastern hemisphere definitely follows Japan!”

In another example of success, Steve DeMan began traveling to Japan in 1997 to showcase his paint techniques and share them with an enthusiastic new audience. Sixteen years later, his name is strong in Japan, and people anxiously await their turn to learn from the American legend.

DeMan’s willingness to share knowledge has earned him tremendous respect, and shops eagerly await the opportunity to work with him on special projects. He recently launched a new painter’s-tape line that was very well received by the audience at the Next Auto Show in Tokyo in May 2013, where he gave live demonstrations.

Kicker has also seen strong and steady growth in Japan over the past several years. According to Chet Weddle, the company’s international sales manager, the primary reason for Kicker’s continued success is the exceptional relationship with its distributor in Japan. They meet at least three times per year to review changes in the marketplace and to go over installations and troubleshooting.

	Car customizing has been around in Japan for many years. With Japanese cars prevalent in the United States, SEMA members have long made sought-after products for vehicles on Japanese roads.

With a product that requires accurate installation, Kicker understands that one bad install or demo can severely damage the brand and therefore takes all means necessary to ensure that it doesn’t happen. The company has also established a distribution system that allows its distributor to wholesale the product to other distributors as well as service the needs of local shops.

DIY and Superstores

Japan’s love of automobile accessories is demonstrated by the massive number of items stocked by superstores such as Autobacs. The square footage of the shopping areas of these stores is comparable to Target here in the United States, but they also have several bays to work on cars.

Enthusiasts will easily spend two hours just looking around, finding everything from air fresheners and model cars to electronics and performance parts. Basically, anything related to an automobile is sold there. But unlike U.S. stores, such as AutoZone and Pep Boys, you will not see replacement parts, such as sparkplugs, hoses or batteries. Those types of products are usually not sold to the consumer. The products sold in the Japanese superstores are for the aftermarket audience.

DIY is rare in Japan. Typically, professionals perform the installation of anything that takes longer than a few minutes. Working on one’s own car is a rare hobby due to the limited space in which the Japanese people live. Cars are typically parked in underground structures or in carports, with no available space to work or store tools.

The automotive superstores mostly cater to the domestic custom segment, which is vans and wagons, tuners, K-cars and VIPs. If your product falls into one of these categories or is universal, the superstore avenue is definitely something that should be considered, as it is big business.

Competition

Competition within Japan is pretty straightforward. U.S., European and, of course, Japanese products are typically held in high regard. Chinese and other Southeast Asian products are also readily available.

The benchmark for quality in Japan is very high, so only companies that are willing to put quality as a top priority will see success. Interestingly, price is not a huge factor in this market segment. Quality and service are probably more important than price. Many Japanese say that they would be willing to pay a higher price in exchange for better quality/service in regard to products from the United States.

Distribution/Logistics

		As a trade association, SEMA seeks to help member companies grow and expand their businesses A key program is to help its members grow is through exporting. For many of our members, exporting products to key international markets is integral to their success, and SEMA is available to help identify strategic markets and guide members along the way. The program includes, to name a few, fact-finding trips and meetings with pre-vetted buyers in key emerging markets; importation of vehicles popular globally but not sold in the United States, make/model data for key worldwide markets; international roundtables with international buyers at the SEMA Show. For more information on SEMA’s international resources and programs, contact SEMA’s international director at lindas@sema.org.

One interesting aspect of the Japanese custom-car market is that almost all distributors and shops have purchasing agents in the United States, typically on the West Coast. These U.S. companies purchase cars and accessories and ship them to Japan. In hindsight, this is a dream come true for U.S. manufacturers, but it can also work against you. Here is a simple breakdown:

Pros:
•Payment will come from a U.S.-based company.
•No need to learn export documentation and logistics, since the exporter will take care of everything.
•Language barrier will be minimal.
•Very easy, almost like another domestic customer.

Cons:
•Cannot control pricing once the product leaves your facility.
•No direct communication with your customer in Japan.
•Purchasing agent works on behalf of the Japanese customer, not you.
•Your product will likely be sold through a small network.

Getting Started

Step one is to research the market, then make a trip to Japan. Find your niche and develop a plan on how to enter the market. Most U.S. companies should probably start with cars that are sold in both countries.

Keep expectations realistic. Remember that you are not trying to create the next trend; you should just be looking for a piece of the pie. Once you get a foot in the door, expand your offerings to the mainstream audience by modifying/creating product for cars that are not sold in the United States.

Summary

A U.S. company that offers a quality product and is willing to invest in the Japanese market can be successful. Patience, willingness to adapt and a drive to build relationships are crucial traits necessary to enter the market. Though it is not easy to enter, once you’re in the Japanese market, you almost have to go bankrupt for customers to drop you. The Japanese are extremely loyal to brands, and the custom-car market is no different. Contrary to popular belief, the doors in Japan are open, but you need to knock before they let you in.

Enthusiast Magazines Available in Japan

Getting your hands on actual copies of some of the many enthusiast magazines available in Japan would be ideal. If not, Facebook is a good option because it is easy to navigate and there are a lot of photos to look at. A few to look for include:

J-Lug—JDM, USDM, www.facebook.com/jlugmag
Custom Car—JDM, www.facebook.com/customcar.japan
VIP—Higher-end Japanese and European, www.facebook.com/vipcar.japan
Style Wagon—Vans and wagons, www.facebook.com/stylewagonjapan

About the Author

Kagawa International is a Japan business consultant and exporter of U.S. automotive products. The company was established in 2000, and owner Jeff Kagawa has been exporting American goods to Japan for more than 21 years. Kagawa International works with U.S. companies to help them enter the Japanese market, providing research and creating personalized sales and marketing plans. Its vast network consists of many of Japan’s top custom-car builders, GM Japan, big-box chains and various dealerships. Jeff Kagawa can be reached at jeff@kagawainternational.com.