Trends and future potential of the automotive industry
What are the trends and future potential of the automotive industry? And what are some automotive jobs in Japan?
Automotive is one of Japan's leading industries. And one key component of automotive in Japan is their manufacturing segment.
What is manufacturing in automotive today and how has it shifted?
Manufacturing in automotive has shifted from “manufacturing and selling cars” to "providing more comfortable mobility as a service". This is a result of various trends such as technological progress, DX (Digital Transformation) and changing consumer values.
As such, we will look at what segments the automotive industry is made up of, what are some of the trends that have emerged which will result in a shift in the manufacturing and automotive industry. With this, what are the manufacturing jobs and automotive jobs which will arise.
Automotive industry outlook
The Japanese automotive market is estimated to be worth ¥69.6 trillion, comprising of 5.29 million people in the automotive industry, or nearly 10% of Japan's total workforce. In broader sense, the automotive industry includes car maintenance and repair, petrol stations and transport services as well as manufacturing.
In terms of car manufacturing, there are three main types of companies involved:
- Suppliers (who manufacture parts and components)
- Manufacturers (who assemble the car bodies)
- Dealers (who sell the finished car bodies)
Toyota, Nissan, Subaru and Honda are the manufacturers that most people in Japan think of when they hear about the automotive industry. But there is actually a hierarchy of suppliers in the automotive industry’s supply chain – Tier 1 supplies parts directly to these manufacturers, Tier 2 supplies parts to Tier 1 and are often experts in their own domain which may not only refer to the automotive industry, and Tier 3 supplies are mainly raw materials or close to raw materials. Manufacturers, Tier 1 and Tier 2 will all require materials in one form or another, so Tier 3 often supplies these to all mentioned parties.
Who are in Tier 1?
Tier 1 suppliers include Japanese companies such as Denso, which works with Toyota Motor Corporation and almost all other major Japanese manufacturers. There are also a number of foreign companies based in Japan, such as the Continental Group and Bosch from Germany, Autoliv from Sweden as well as Visteon from the USA. In addition to the growing number of mega-suppliers that have emerged as a result of business partnerships and mergers between suppliers, there is also a growing presence of suppliers for in-vehicle cameras, image processing and AI-related technologies.
CASE – What is CASE?
The acronym CASE stands for Connected, Autonomous, Shared and Electrification. As innovations within the automotive industry advance, CASE also becomes increasingly important as it changes the concept of cars.
Each element of CASE is explained in greater detail below.
Connected refers to the connectivity of the car to a network by an internal communication device, just like a smartphone or a computer. This allows data about the condition of the vehicle (such as poor maintenance or breakdowns) and the surrounding conditions (such as congestion, etc.) to be sent and received over the network. Benefits for car users include automatic notification in the event of vehicle breakdown or theft, and remote control, in addition to the traffic congestion information and forecasts of car navigation systems that many drivers may already be using. In Japan, Toyota Motor Corporation and Nissan Motor Co., Ltd. have already implemented this technology to practical use, and it is expected that more accurate analysis will become possible as more data are accumulated.
As with the Internet of Things (IoT), all devices connected to the network pose a cyber security risk, as third parties may be able to control the vehicle by hacking into the communication equipment or devices. The companies that produce automotive software and infrastructure are constantly testing these to ensure their safety, and this is one of the main challenges in making the connected car a reality.
You may click here to get to another article around protecting our cars from cyber attacks for more information.
The two main levels of automated driving technology which are more common: Driver Assistance and Automated Driving.
Level 1: Driver assistance is where the system supports the vehicle's movement – forward and backward or left and right. However, the driver still remains responsible for driving the vehicle.
Level 2: Automatic driving functions under certain conditions where the system controls the movement of the vehicle by providing steering and brake or acceleration support. This can include adaptive cruise control which is commonly used. But similar to level 1 automated driving, the driver must be supervising the automated features.
Level 3: Conditional driving automation where the systems perform under a dynamic driving task within the specifications that it is designed to do so. Human intervention is only required in emergency situations.
Level 4: Fully driving automation under certain conditions where vehicles have been programmed to travel between point A to point B. This is restricted to specific geographic boundaries. Examples of these include driverless public transportation services.
Level 5: Highest level of fully driving automation which means that a vehicle can drive itself everywhere without any human interaction. It isn’t bound by geography, weather or any other conditions.
You may click here to see a simply infographic from the Ministry of Land, Infrastructure, Transport and Tourism's classification of levels of automated driving.
Driver assistance (Level 1 & 2) basically means that the driver (human) is assumed to be driving, and the vehicle's on-board systems support steering, acceleration and deceleration in order to avoid accidents and danger. These systems are also known as Advanced Driver Assistance Systems (ADAS) can detect the distance between vehicles to adjust speed and braking, detect pedestrians, avoid danger in poor visibility environments such as at night, recognise traffic signs to give the driver appropriate instructions, assist with parking and much more. These technologies are already in use by many car manufacturers.
As the technology advances to the level of automated driving, it is assumed that the system will basically be in control. In 2021, Honda was the first company in the world to commercialise a vehicle equipped with a Level 3 'Traffic Jam Pilot' function which allows the system to change the driver's position when there is a traffic jam on the motorway.
Achieving fully automated driving at Level 5 is no easy task, as it will require not only the development of vehicles, but also the redevelopment of towns and roads. Legal issues, such as liability in the event of an accident, will also need to be addressed as the technology advances.
The rise of the sharing economy has led to growing awareness, particularly in urban areas, that cars are not to be owned by individuals but to be shared and used when needed. In addition, the spread of the new coronavirus infection (Covid-19) has led to an increase in the number of people concerned about the use of public transport, which has led to rethinking some of the ways in which people in urban areas, who previously felt they did not need a car to get around.
As the world moves towards zero emissions to prevent global warming, electric vehicles are becoming an increasingly plausible option for many consumers to achieve sustainability. Electric vehicles also have the potential to be used as an emergency power source in Japan, a country with a history of natural disasters. Although there are some challenges, such as a charging points, the government and local authorities in Japan are promoting subsidies and tax incentives for those who purchase electric vehicles, and it is expected that their market share will continue to grow.
Automotive industry trends
The automotive industry is in a transitional period of various changes as described above. The following automotive industry trends are expected to accelerate in the future:
MaaS (Mobility as a Service)
MaaS refers to Mobility as a Service and is expected to become more extensive as shared services (part of CASE) develops. The ride-sharing business is already sweeping cities in other countries, with certain exceptions like Japan where it is difficult to scale from a legal perspective and is only being introduced under certain conditions, such as in rural areas and depopulated areas. In the future, a car will become more of a public good than a private property, and the automotive industry itself will be transformed from a manufacturing industry to a MaaS industry. The new MaaS industry will be one that provides new value in the form of mobility.
Toyota Motor Corporation have announced plans to build a connected city in Shizuoka Prefecture where all kinds of goods and services will be inter- connected. They will work to develop and demonstrate a range of services including CASE, artificial intelligence, robotics and smart homes. The way we think about cars will change and this will have a major impact on the way we live, especially those in smaller towns. Keep an eye on this project the future of cars and mobility as a service evolve.
From competition to collaboration
With technology advancements leading to an increase use of AI, connectivity and the development of mobility apps, the automotive industry has expanded in the areas it used to cover. Furthermore, increased connectivity and mobility apps also lead to security issues which need to be addressed and monitored. It no longer seems feasible for one company to bear the costs and resources alone. Instead, we will see an increasing number of collaborative projects across companies and manufacturers to transform the automotive industry.
Sustainability – What is sustainability?
Sustainability is the ability to “hold on” and sustain the manufacture of cars for use in the future, addressing certain areas of concern. This will be the gradual move from electric cars to hydrogen cars. As electric vehicles become increasingly popular, research and development of hydrogen vehicles are also progressing. Hydrogen vehicles, which use fuel cells produced by a chemical reaction between hydrogen and oxygen as their energy source, have the advantage of being zero-emission, are extremely clean and do not require long recharging times. These would address some of the challenges faced by electric vehicles. Although there are still some issues to be addressed, such as the high cost of production due to the need for rare metals and the need to develop infrastructure for refuelling, hydrogen cars have the potential to become the next generation of clean vehicles.
Automotive jobs in Japan
The automotive industry is amid a period of change, with production and sales declining in 2020 due to Covid-19, although it has since picked up in 2021. It is a future-oriented and stimulating industry that can have a significant impact on the future of our cities and our way of life.
Transferrable skills and experience
IT (Robotics, Engineers, Security)
As we've seen, IT is a huge part of today's automotive development. We expect to see an increase in demand and job changes for people with an IT background, such as software engineers and security consultants. This represents job opportunities for those within the automotive industry as well as those in other technologies but have specific technological roles such as robotic process automation.
In a world where most customer communication is digital, there is great value in making your communication as engaging as possible. As consumers' expectations of cars change, the ability to build customer success through digital marketing and customer journeys are in high demand to deliver value not only as a product but also as a mobility brand.
Project Management / Stakeholder Management
As cross-border innovation progresses, we expect to see an increase of joint projects across domestic and international companies. In order to ensure the smooth execution of these projects, you will need to be able to coordinate with various stakeholders and handle any conflicts that may arise. Project management will be key. This includes communication skills, particularly language skills, which will only increase your market value.
Let Progressive Recruitment help you
At Progressive Recruitment we specialise in energy and engineering recruitment, with a focus on the automotive industry. With a presence in 15 countries around the world and 44 offices, we have established strong relationships with our clients, many of whom are foreign companies, and can help you to develop your career. We also partner with companies looking to expand their business in Japan, by helping them to realise their human resources and talent strategies as well as secure some of the best bilingual and global talent. If you would like to discuss your requirements or may be a candidate looking to enter the automotive industry, please feel free to contact us using the form below.