This year and next will be the golden window for entering Japan's automotive electronics supply chain, according to a new analysis.
The Korea Trade-Investment Promotion Agency (KOTRA) said on the 22nd that it is publishing a guidebook titled "Japan's Automotive Electronics Market Trends and Korean Companies' Market Entry Strategies." Its central message is that this year and next mark the right moment for Korean firms to break into the supply chain, as Japanese automakers decide on the new models and parts suppliers for vehicles launching around 2030.
In Japan, hybrid vehicles that combine an engine with an electric motor are driving electrification. Hybrid sales in Japan rose about 49% to 1.53 million units last year from 1.03 million in 2021, according to the Japan Automobile Dealers Association. Hybrids also require electronic components such as power semiconductors, and demand is being compounded by the standard installation of driver-assistance features. Shipment data for eco-friendly vehicle parts in 2024, compiled by the Japan Auto Parts Industries Association, showed particularly strong gains for onboard chargers (up 91.1%), body electronic control units (up 89.3%) and vehicle cameras (up 15.1%).
KOTRA expects Japanese automakers to concentrate their supplier selections for models entering mass production around 2030 into this year and next, since developing a new vehicle typically takes Japanese companies three to four years. Transaction structures are also shifting quickly. As the practice of long-term dealings with affiliated suppliers within a group has receded, the average number of automakers a single parts supplier works with has risen to 7.09. Selection criteria are moving from price toward stable supply and security reliability, which KOTRA sees as opening favorable opportunities for Korean firms that are geographically close and competitive on quality.
An employee at a Korean electrical and electronic parts company that supplies Japanese automakers said Japanese carmakers are broadening procurement to new partners beyond their existing suppliers. "If we can meet model-specific design requirements and strict safety standards while staying price-competitive, there is plenty of opportunity for Korean companies," the employee said.
KOTRA advised Korean companies to approach Japan as partners who reinforce its supply chain rather than replace it. For product categories where Japanese firms are strong, Korean suppliers should knock on the door as a second source that complements incumbent suppliers, while in areas where Korea leads — such as communication modules, memory and camera modules — they should position themselves as filling gaps in the Japanese supply chain. The agency also laid out a phased localization strategy: secure mandatory certifications in advance, including the IATF 16949 automotive quality management standard, cybersecurity requirements and Japanese Radio Act certification, then build a delivery track record at automaker plants in the Kyushu region before expanding sales coverage to development hubs such as Aichi and the Kanto area.
Park Yong-min, head of KOTRA's Japan Regional Headquarters, said Japan is a market where hybrids, compact electric vehicles and software-defined vehicles are all growing at once. "With the next two years serving as the golden window for entering the Japanese market, companies need to move quickly on certifications and prototypes to show Japanese automakers that they are partners worth trusting," he said.