LOCAL REPORT Japan Paul Stephenson & Ben Griffin, OATS Ltd

With a population of 127m, Japan ranks 10th in the world. However, as numbers have started to decline and the population age since 2011, tax revenues have also reduced and Japan’s public debt is now double its economy, making it the world’s most indebted industrial nation.

The vehicle parc, manufacturing and sales Since 1945, Japan’s vehicle parc has grown significantly from just 113,000 cars, trucks and vans to 81m by 2018. Sales have been relatively stable at around 5.2m units (including imports) annually. Motorcycles added a further 10.7m - down from a 1986 peak of 18.7m.

The top five best-selling car brands at the end of 2018 were Toyota, Honda, Suzuki, Daihatsu and Nissan. However, foreign manufacturers, led by Mercedes and BMW, are gaining significant presence, hitting a record 9.1% of sales in 2017.

That said, Japan’s automotive industry shipped some 4.8m units overseas, primarily to North America (1.9m units in 2017) and Europe (865k units).

Base oil production Japan crude demand is entirely imported for its 15 oil companies and 22 refineries which produce approximately 3.5m b/d of refined output.

With supply coming primarily from Saudi Arabia and UAE, concerns over oil security mean Japan has to walk a precarious investment and diplomacy tightrope.

Japanese refineries have recently consolidated. JXTG Nippon Oil & Energy after JXTG Holdings and TonenGeneral Sekiyu K.K merged in 2017. Next is Idemitsu Kosan Co. and Cosmo. Earlier this year, Idemitsu also merged with fourth-ranked Showa Shell Sekiyu K.K. to form Idemitsu Showa Shell, with combined sales of more than $45bn.

Both diesel and gasoline fuel quality and specifications equate to Europe and elsewhere, including the use


of biofuels limited to B5. Non-conforming fuel can attract harsh penalties.

Lubricants production and market Japan ranks fourth after India in global lubes consumption. As local demand has fallen, Japan has become a net exporter of refined products.

Lubricants specifications are of a high standard with many formulations using Grp II, Grp III, and Grp IV base oils. OEM’s prefer own-branded products, but are more relaxed about alternative specs such as JASO, ACEA, and API, given large markets and manufacturing plants in developing countries.

As innovators, Japanese automakers are constantly improving engine designs, from the early Mazda rotary engine to Honda’s off-set crankshaft design and Nissan’s CVT transmissions.

As a result, Japan leads the way in low viscosity engine, gear and transmission formulations, with their latest JASO Standard, GLV-1 SAE 0W-8, and 0W-12, 4-stroke engine oils. OEM’s prefer own-branded lubricants, although are more relaxed about alternative specs such as JASO, ACEA, and API, given large markets and manufacturing plants in developing countries.

In summary

How this industrial nation and its auto industry will evolve and adapt will be the result of national and global transformation in vehicle design, ownership and use. This, combined with climate change legislation and more stringent emission standards, could see Japan become a bellwether for the future of both mobility and lubricants development and marketing.


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