What is this great thread? Globalisation? Copyright infringement? Neither - their business is autoparts, and their livelihood is under threat by the future invasion of electric cars to the Japanese market.
Hamamatsu under threat
When you make your living selling mufflers, reconditioned engines, spark plugs, filters and all manner of oils for the millions of cars on Japanese roads, the prospect of hundreds of thousands of cars that have no requirement for these parts is a grim one. Hamamatsu is Japan's center for car parts and there may come a time when they become surplus to requirements, unless they can adapt to change.
The change is being wryly termed "electric vehicle shock". Thankfully, there are companies willing to help. One such company is Suzuki Motor, who in contrast to their small share of the market in the U.S, are one of Japan's highest sellers. Their Wagon R kei car, roughly the size of the 2012 Mitsubishi i-MiEV, has been Japan's best selling model for many years.
The study at the center of the story has found that almost 30 percent of Japan's $435 billion car parts industry is made up of parts that could be rendered obsolete by EVs. Around Hamamatsu, where industry is heavily biased towards engine parts, the figure is almost 50 percent.
Is the U.S. next in line?
With a large proportion of Japan's auto parts industry biting their fingernails, should U.S. companies be worried too?
Not necessarily, for several reasons.
The first is market share. Market research firm J.D. Power estimates that by 2020, electric vehicles (including hybrids) might capture 7.3 percent of the global automotive market. This is around 5.2 million vehicle sales out of a predicted total of 70.9 million.
That's a lot of cars, but proportionally it's nothing to be worried about. Even Renault-Nissan's Carlos Ghosn's estimate of 10 percent EV market share doesn't look too scary. And that's globally. Whilst the U.S. makes up the largest proportion of global vehicle sales, the proportion of EVs might be even smaller than the global estimate. If we're being pessimistic, auto-parts makers are only likely to lose out 10 percent of their sales, and that's if we only consider engine-related parts.
Realistically, we're looking at a 30 percent of 10 percent drop, or less than three percent in total. Not quite worth barricading the doors over.
Daihatsu Mira EV - Photo by the Japan EV Club
What this means is that it's much easier to get about in Japan by means other than personal automotive transport. High-speed trains, impeccably-timed public transport, and legal requirements such as needing proof of a parking space if you own a car in a city center, means that fewer journeys are made by car in the first place.
So if your business is autoparts you're already battling with a market that teeters on the edge of necessity. In the States, this very obviously isn't the case. Cars are virtually essential for many people. Consumers travel greater distances by car and more often, and there are few viable means of public transport that could replace the need for a car unless you live in a city like New York. Even then, subways, buses and yellow cabs will only get you around inside city limits. For journeys further afield, you take... the car.
All this means that U.S. consumers need more capable cars, and most EVs don't fit into that bracket yet for many people. A hundred mile range gets you between major cities in Japan, in the States it barely gets you out of your local county.
And this requirement for more capable cars pretty much guarantees the survival of autoparts companies, who can provide industry and individuals with everything they need to build and maintain the cars for which demand is huge.
All this will be of little consolation to the Hamamatsu businesses though, but Hiroshi Tsuda, former Suzuki president and now in charge of the alliance helping out the parts companies, is still optimistic.
"By acting now, both parts makers and car makers can stay ahead of the curve. Japanese industry has always adapted with the times. This is not a crisis. It's a big opportunity."
With the support of companies like Suzuki and Yamaha, perhaps the future isn't so bleak for Hamamatsu after all.
[New York Times via Syndney Morning Herald]