China has already surpassed Japan in the first half of this year (see chart above). Moreover, in just the first five months, China exported more cars than in all of 2021. If current trends continue, China could export as many as 4.4. million vehicles for 2023 as a whole, up from 3.1 million in 2022. Given that vehicles account for 18% of all Japanese exports, Japan's relative decline in autos shows that a cheaper yen alone cannot solve Japan's export problems. Since some of Japan's automotive weakness stems from Covid, it will take some time to see whether this reversal of fortune will last.
 
             The weakness extends beyond exports. Japan seems to be suffering a similar decline in sales from its overseas auto plants. In 2022, overseas output was down 20% from its 2018 peak. Japan's share of total global auto production by all countries peaked at an incredibly impressive 33% back in 2008, is now down to 28.4%, and could sink even further due to both the rise of China and Japan's lag in battery-powered electric vehicles (BEVs).
 
             For details, see https://richardkatz.substack.com/p/china-has-already-surpassed-japan

Richard Katz