Japan's Auto Industry Could Consolidate to Just Three Brands by 2021

Craig Cole
by Craig Cole

Major changes could transform Japan’s automotive business in a major way over the next five years.

According to a report from Kelly Blue Book, tectonic changes could rock the world’s largest vehicle producer right to its foundation. Consolidation could reduce the country’s eight brands down to just three or four by 2021. As crazy as this may sound, there are several good reason why it could happen and cost is one of the biggest.

Designing, engineering and building vehicles is incredibly expensive, especially as they become ever more tech-laden. For instance, the amount of money spent on research and development to bring autonomous car to market is unfathomable. If all competitors are rushing to introduce this technology they’re all expending a ton of capital that could be spent elsewhere if they weren’t duplicating work. In short, consolidation could lead to much greater efficiency.

SEE ALSO: Nissan and Mitsubishi Could Join Forces

Beyond all of this, the cost of meeting ever-changing government regulations around the world are nothing to scoff at, either. A strong Yen and slowing sales in China are issues compounding issues for these companies.

Aside from rising costs, Japan’s auto industry has received something of a black eye in recent years. Profits at Toyota, the world’s largest car company, have slowed, Mitsubishi has been caught fudging fuel-economy figures and then there’s the devastating Takata airbag recall.

Curiously, we’re already starting to see consolidation in the Japanese auto industry. Nissan just announced a tie-up with Mitsubishi, with the former company buying a third of the latter’s stock. This deal could cost Nissan around $1.9 billion but it’s likely there are even greater monetary savings to be reaped.

[Source: CNBC]

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Craig Cole
Craig Cole

Born and raised in metro Detroit, Craig was steeped in mechanics from childhood. He feels as much at home with a wrench or welding gun in his hand as he does behind the wheel or in front of a camera. Putting his Bachelor's Degree in Journalism to good use, he's always pumping out videos, reviews, and features for AutoGuide.com. When the workday is over, he can be found out driving his fully restored 1936 Ford V8 sedan. Craig has covered the automotive industry full time for more than 10 years and is a member of the Automotive Press Association (APA) and Midwest Automotive Media Association (MAMA).

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  • Smartacus Smartacus on May 13, 2016

    The brand names that will still be alive in 2021 include Honda, Mazda, Toyota, Nissan, Subaru, Suzuki, Daihatsu, and Mitsubishi.

    • Smartacus Smartacus on May 13, 2016

      lo and behold !!! a few hours after i wrote this; parent company of FUBARu, Fuji Heavy Industries is changing their name to Subaru. That name isn't going anywhere.