Japan removed tariffs on foreign cars 50 years ago, but almost none are sold

In 1978, Japan made a bold move by eliminating import tariffs on foreign cars, inviting global automakers to compete freely in its domestic market. The expectation was clear: open the doors and let the best products win. Yet, nearly five decades later, foreign car sales in Japan remain strikingly low. Despite an open market, Japanese consumers continue to overwhelmingly choose domestic brands, leaving foreign manufacturers puzzled.

Cultural loyalty and practical barriers

The Japanese auto market is shaped by deep-rooted cultural loyalty and strict regulations. Local consumers trust domestic brands and show little interest in foreign alternatives, especially when Japanese vehicles are more affordable, space-efficient, and tailored to urban lifestyles. Legal frameworks like the Shako Shomeisho—which requires proof of parking before purchasing a car—further limit demand.

Foreign cars face uphill battle

Even without tariffs, foreign manufacturers struggle with regulatory hurdles, including emissions standards and the need for right-hand-drive adaptations. These changes raise production costs, making their cars less competitive. Additionally, imported vehicles tend to be luxury models, significantly pricier than their Japanese counterparts.

Market still dominated by local brands

In 2016, out of nearly five million cars sold in Japan, only around 279,000 were foreign-made. Mercedes was the sole foreign brand in the top 12, and not a single imported model cracked the top 30. By 2024, none of the 50 best-selling cars in Japan were foreign, underscoring the ongoing dominance of domestic automakers.

Despite an open market, Japan’s automotive industry thrives behind invisible barriers—cultural preferences, regulations, and pricing—that continue to deter foreign competition.