Eco-friendly vehicle parts shipments up 15.3%

Chargers, body control units double

SDV share of new cars seen at 62% by 2035

KOTRA's headquarters in Yangjae, Seoul. [KOTRA]
KOTRA's headquarters in Yangjae, Seoul. [KOTRA]

Demand for automotive electronics — including vehicle cameras, chargers, power semiconductors and electronic control units — is rising rapidly in Japan, and 2026 and 2027 are shaping up to be a golden window for Korean companies to break into the supply chain, according to a new analysis.

KOTRA published a guidebook Thursday analyzing Japan's automotive electronics market and shifts in its trading structure, titled "Trends in Japan's Automotive Electronics Parts Market and Entry Strategies for Korean Companies."

In Japan, electrification is being driven primarily by hybrid vehicles, which combine a combustion engine with an electric motor. According to the Japan Automobile Dealers Association, hybrid vehicle sales rose about 49 percent — from about 1.03 million units in 2021 to about 1.53 million units in 2025. Because hybrids also require power semiconductors and other electronics, and because driver-assistance features are now standard across vehicle types, demand for automotive electronics is growing regardless of powertrain.

A survey conducted in March by the Japan Auto Parts Industries Association found that shipments of eco-friendly vehicle components — goods dispatched from factories to domestic and overseas buyers — reached 1.3 trillion yen ($8.2 billion) in fiscal 2024, up 15.3 percent from the previous year. By category, vehicle chargers surged 91.1 percent, body electronic control units rose 89.3 percent, and vehicle cameras climbed 15.1 percent. The Japan Electronics and Information Technology Industries Association projects that software-defined vehicles will account for 62.0 percent of new car sales by 2035, up from 0.03 percent in 2025.

The window for supplier selection is also narrowing. Because Japanese automakers typically take three to four years to develop a new model, supplier selections for vehicles slated for mass production around 2030 are expected to be concentrated between now and 2027. Trading structures are shifting as well. As the longstanding practice of exclusive, long-term dealings with in-group suppliers weakens, the average number of automakers a single parts company supplies rose to 7.09 as of 2024, according to the Japan Auto Parts Industries Association.

Supplier selection criteria are also moving away from price toward stable supply and cybersecurity reliability. KOTRA said new opportunities are opening for Korean companies, which are geographically close to Japan and competitive on quality.

An employee at a Korean electrical and electronic components company that supplies parts to Japanese automakers said Japanese carmakers are broadening their procurement to include new partners beyond existing suppliers. "If a company can meet vehicle-specific design requirements and strict safety standards while remaining price-competitive, there is plenty of opportunity for Korean firms," the employee said.

The guidebook said Korean companies should approach Japan's supply chain as a partner that "supplements" rather than "replaces" existing suppliers. For categories where Japanese firms are strong, the recommended approach is to enter as a secondary source that complements existing suppliers. For areas where Korea leads — such as communication modules, memory chips and camera modules — positioning as a complement to Japan's supply chain is the more advantageous path.

The guidebook also outlined a phased localization strategy: secure essential certifications in advance — including IATF 16949 automotive quality management, cybersecurity standards and Japan's Radio Law certification — build a delivery track record at automaker factories in the Kyushu region, then expand 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 hybrid vehicles, compact electric vehicles and software-defined vehicles are all growing simultaneously. "The next two years, when supplier selections will be concentrated, are the golden window for entering the Japanese market," Park said. "Companies should move quickly to prepare certifications and prototypes and demonstrate that they are trustworthy partners for Japanese automakers."


eyre@heraldcorp.com