The Japanese automobile industry must change quickly or it risks not being able to sustain the ongoing technological transformation. Koji Sato is the one who launched the warning, vice president and chief industry officer of Toyota, as well as president of the Japan Automobile Manufacturers Association (Jama), the organization representing the country's major manufacturers.
"If things don't change, we won't survive.", Sato said during a meeting with suppliers. A message addressed not only to Toyota, but to the entire Japanese manufacturing system, grappling with increasingly costly investments in electrification, software development, batteries, and advanced driver assistance systems.
Sato calls on the Japanese auto industry to change its model
According to Sato, the Japanese automotive sector is going through a transformation of exceptional magnitude. Historic brands must not only update their ranges, but rethink the way they design, purchase, and produce vehicles. "We have a strong perception of crisis: the Japanese automotive industry is undergoing a huge transformation," the manager explained. The proposed response involves a closer cooperation between Toyota, Nissan, Honda, Mazda, Subaru, Mitsubishi and Suzuki.
The idea is limit competition on technical parts These do not directly influence customer choices, but instead maintain competition in design, performance, software, engines, and digital services. This shift would allow companies to reduce industrial complexity without sacrificing their identity.
From wiring to steel, the revolution of common components
The project supported by Sato aims at definition of shared standards for components and materials used by all manufacturers, such as electrical wiring, steels, and plastics. Today, each car manufacturer requires different specifications, forcing suppliers to multiply variants, production lines, and processes. The most obvious example is that of wiringCompanies in the supply chain must produce approximately 70.000 different versions to meet the needs of individual brands and models. This fragmentation hinders automation, increases costs, and diverts resources from innovation.
According to Sato, standardizing the basic architectures could increase productivity by more than tenfold in this sector. It wouldn't be a matter of building all cars the same, but of sharing the elements invisible to drivers, focusing investments on the features that truly determine a vehicle's value.
Consumer priorities have shifted toward more advanced software, assisted driving systems, faster-charging batteries, and a diverse engine offering. It is on these fronts, in Toyota's vision, that brands must continue to differentiate themselves.
China advances and redraws the world balance
Sato doesn't present the plan as a purely defensive response against Chinese manufacturers. However, he acknowledges that Japan must learn from the speed with which Chinese companies develop technologies, design new models, and bring them to market. The competitive pressure is now evident. In May, Chinese groups surpassed Japanese manufacturers in sales in the European market for the first time ever: Geely, SAIC Motor, BYD, Chery, and Leapmotor sold a combined 138.140 vehicles, surpassing the 130.424 units recorded in the same period by Toyota, Suzuki, Honda, Nissan, Mazda, and Mitsubishi.
Difficulties are also evident in China, where Japanese manufacturers lost ground in the first half of 2026. Toyota sales fell 17%, while Honda's sales contracted by 35%. The rise of Chinese electric vehicles is also changing the balance in markets where Japanese brands have traditionally been strong, such as Southeast Asia and Australia.
Japanese car: the challenge goes beyond production
The standardization of components represents only one part of the strategy promoted by JamaThe plan also includes interventions for make logistics more efficient, ensure access to strategic raw materials, strengthen recycling, and develop the infrastructure necessary for autonomous driving. Sato also calls for a simplification of the Japanese tax system applied to the automotive industry and new policies to attract engineers, technicians, and digital skills. The goal is to strengthen the entire industrial ecosystem, not just the balance sheets of individual companies.
“This is precisely the time to further develop and evolve through the challenges and reform initiatives facing the entire automotive industry,” Sato said.
For Sato, there's no time to waste. The challenge is enormous, but without an industrial breakthrough, Japanese manufacturers risk falling behind in the race that will decide the future of the automobile.
