Japanese Manufacturers Upping Reverse Importing

'Reverse importing' means importing cars into the brand's country of origin that are manufactured abroad. It's a very common practice, but not so much in Japan or Asia generally. Considering that Japan has many car plants overseas, it's surprising to me that reverse importing has been kept to a minimum. 

To the right is a chart broken down into five year periods. It shows the average number per year of imported passenger cars that are Japanese brands. 

There is a fair bit of fluctuating but for eleven months of 2025 the number is up substantially. Is it just a flash in the pan or is this going to be a more common practice?

It's true that back in 1995 and 1996, there were slightly more imported but they quickly fell back. Could this happen again? It doesn't seem so. There are financial and political pressures on car makers so importing can help in both cases. 

One reason for the reluctance was to maximise local production, which I believe is viewed very positively in Japan. I recall the first generation Dualis (Qashqai) crossover was made in Japan but it was not exported so the volumes didn't justify it being just for local consumption. 

The second generation therefore wasn't produced domestically. All export markets (except China) were covered by production from the UK. One would think a switch to sourcing cars from there would be logical but no, they just stopped selling them in Japan.

Another possible reason was that unhelpful certification procedures, which makes lower volume imports for regular cars less attractive. The current situation acts effectively as an import obstructor. 

I notice that Toyota is going to import some lower volume cars made in the USA. It will be facilitated by relaxed certification procedures that will be implemented by Japan’s transportation ministry. I don't know if this relaxing of certification procedures is for all future imports or is only being applied selectively. 

It would make sense for Japanese car companies to import more to avoid duplication and offer more variety. It may impact slightly on local production volumes but surely to a negligible degree. Of course, obstructive certification procedures may force them to limit that. Still, there may be an increase of reverse importing, especially if the Japanese authorities cooperate. 

Challenges For The Automobile Industry

Industries generally are grappling with various issues but the car industry is particularly vulnerable. One former CEO was critical of the wastefulness of the industry with a reluctance to share costs with other manufacturers. Necessity is moving many to increased cost sharing. 

Car companies have many issues to deal with and most are not self inflicted. Here are some of them.

Tariffs: These have always been around, usually started to protect local manufacturing but tend to hang around long after that is no longer required. The worst offenders are in Asia, with China recently reducing the threshold on tariffs for premium cars, which is over and above its standard tariff. Why are tariffs required at all? The US has also been using tariffs to encourage more local manufacturing. 

Regulations. Reducing emissions is the goal, achieved with incentives or disincentives. If done with reasonable warning, the industry can adjust. Sometimes, they can prove to be hard to achieve, causing backtracking as with the EU in a recent about face on its 2035 deadline to end fossil fuel vehicles. A relief for some in the industry, but still disruptive for others. 

Instability. A recent semiconductor shortage and raw material issues contribute to production delays. Rising costs for materials, energy and labour is pushing up costs and usually prices. Even logistical disruptions regarding maritime and road transport have to be accommodated.

Technology. Modern cars are becoming even more complex, with emphasis shifting from mechanical engineering (which is still needed) to increased software development for new features. 

Increasing Competition & Development cycles. Many new brands are coming out of China and the fight for market share is hotting up. New model development has been extremely slow in the past but things are speeding up in that area. 

Summary. The consumer is increasingly spoiled for choice, perhaps even bewildered but doesn't necessarily think about challenges the industry is facing. We just want a good product that fulfils our needs. Meanwhile, the industry grapples with all the challenges that come its way. Hurdles it must jump to survive and hopefully prosper. 

Electric Vehicles Proving Expensive

When I say proving expensive, I'm refering to some manufacturers in this instance. In particular Ford and the F-150 Lightning. If the name Lightning implied that would be selling fast, then that would be a misnomer. 

Sales were suggested to be in the 150,000 region per annum. They peaked at 33,500 in 2024 and over the four years it's been on sale, barely got past a combined total of 100,000. The scrapping of federal EV tax credits may have been the final nail in the coffin, but maybe it was doomed regardless. 

The amazing thing is it was the best selling BEV truck in the US. Mind you, the Cybertruck wasn't exactly competition, just a little opposition. Still there are others out there and they were beaten too. Despite that, Ford has decided to end the Lighning. 

So this u-turn is costing the company billions of dollars, according to Ford. From the outset, I never saw BEVs as an ideal mass market vehicle, more likely to carve out a niche. Surely, fuel cell or synthetic fuels have potential for broader mass appeal. 

Some markets see it differently and are pushing BEVs to become the future of mobility, for now at least. One positive is they are providing some stability by not flip flopping. What it shows is that predicting the future is as difficult as it has ever been. Those that are putting a great deal of money into BEVs are taking a risk and already some have been burned. Electric vehicles sure can be expensive.