Sales of Japanese cars manufactured abroad and imported into Japan are expected to reach an all-time high in 2025. This is because automakers such as Honda and Suzuki are taking advantage of cheap labor in India to enable a cost-competitive production model.
Sales of foreign-made Japanese passenger cars and trucks in the January-November period rose 19% year-on-year to 102,332 units, according to data released Thursday by the Japan Automobile Importers Association. This year’s total is certain to exceed 107,092 units in 1995 – the highest number recorded since 1988.
The 1990s were characterized by intense trade frictions with the United States in the automobile sector. With the value of the yen rising to about 90 yen to the dollar at the time, the Japanese government expanded imports in an attempt to ease tensions, which led to a temporary increase in imports of Japanese-brand cars from the United States.
The year 2025 is likely to set a new annual record – despite the yen’s depreciation to more than 150 yen to the dollar, which has led to higher import costs – thanks to the Indian presence.
Honda has been importing its WR-V compact sports car from India since 2024. In total, the company sold 35,043 imported cars in Japan between January and November.
Suzuki has been importing made-in-India models, such as the Fronx SUV, since October 2024. The company sold 39,009 imported vehicles in Japan from January to November – nine times more than the previous year.
The average monthly salary of Japanese factory workers in New Delhi was 37,583 rupees (about $420 today), according to survey data published by the Japan External Trade Organization. In Tokyo, the figure was 295,849 yen ($2,910), meaning labor costs in India are about one-fifth of those in Japan.
India’s rapid expansion as a global powerhouse in automobile manufacturing is also an important factor. Suzuki’s production capacity reaches one million units in Japan and 2.6 million units in India. President Toshihiro Suzuki stated that “India’s technological level is improving” and added that the quality is not much different from that of vehicles manufactured in Japan.
Car sales in India reached 5.22 million units in 2024, surpassing Japan’s sales of 4.42 million units, and trailing only China and the United States.
While India, with a population of 1.4 billion, is expected to continue growing, sales in Japan are declining due to a declining population, and are expected to fall below 5 million units for the sixth consecutive year in 2025.
In Japan’s accelerating inflation scenario, India’s status as a global export base and expanding production in the country provide cost advantages to automakers, even as the yen depreciates. Honda will produce its global strategic electric vehicle 0 Alpha in India and import it to Japan, starting April 2027.
Imports of Japanese cars made in the United States are also expected to grow. After tariff negotiations with the United States, Japan plans to simplify certification procedures for vehicles manufactured in the country, and facilitate their import.
The administration of US President Donald Trump announced in October that Toyota plans to export American-made cars to Japan. Nissan is also considering doing the same.
Before the 2008 global financial crisis, Japan vied with the United States for the title of the world’s largest automobile producer, with annual production exceeding 10 million units. Japan has since fallen to third place with 8.23 million units and is in danger of overtaking India, which ranks fourth with 6.01 million units.
“Japan’s cost competitiveness has suffered a relative decline, making fundamental reforms in domestic production necessary,” said Sanshiro Fukao, executive researcher at the Itochu Research Institute.