Michelin Tire in Japan ~ How do they adapt their business in Japan, a country with a unique domestic car industry? ~

 

Michelin has a history of more than 100 years since its establishment and is a multinational corporation. The length of its business is wide, with multi-business strategies such as the Michelin Guide gourmet guide book and cafes in Japan, but this time I will analyze the tire business.

One of the 170 countries in which Michelin operates is Japan, where it has been since 1975 and currently has a tire R&D facility. There are two main reasons why I chose to analyze the marketing strategy of Michelin in Japan. First, Japan is a country with its own unique social culture, and multinational companies in other sectors often use different marketing methods from those normally used for internationalization. Secondly, the Japanese automobile industry is unique in that the majority of domestic sales are Japanese cars. Based on these interests, I will analyze how Michelin, a French tire brand, has succeeded in their business in Japan.

 

Michelin’s competitors in Japan and how it adapted their business in this country

The tire sector tends to have competitors of major and specific companies. In Japan, there are a lot of domestic competitors compared to other countries. This is because Japan’s domestic tire market has thrived for a long time before foreign tire companies started their business in Japan. Such long history constructed a strong business relationship between Japanese car brands such as Toyota and Nissan and domestic tire brands such as Yokohama and Toyo, so most of these car brands adopted tires made by domestic manufacturers. There were also foreign competitors such as Hankook and Pirelli. These companies succeeded in marketing in the tire industry in Japan by making business strategy.

 

How Michelin adapted to other competitors?

Michelin is one of the most innovative tire companies, who invented the radial tire. Michelin has succeeded in the tire industry despite the fact that Japanese companies have had priority in the domestic market. The company first adapted a strategy where they decided to sell tires to retailers instead of selling them directly to manufacturers in order to be put on new cars. This strategy considered the diverse climate of Japan as in this country, it is normal to change tires in summer and winter, and even customers who do not drive a lot of miles and do not consume a lot of tires usually change their tires seasonally. According to an article of ¹Imerc, “The market is currently dominated by replacement tires which currently account for 61% of the total sales volumes.” In other words, the Japanese tire market has a larger demand for replacement tires than for OEM tires of new cars. Michelin's development of summer tires that can be used on snowy mountains in winter created a demand from those who don’t like to change tires seasonally. That is, its unique technology attracted customer’s curiosity and let them gain a huge market share in Japan’s tire industry.

 

How do they keep growing in Japan’s tire industry?

According to ²JATMA, Japan's tire industry is not growing, with sales increasing and decreasing only slightly over the last decade (Figure 8-1). 

Sales of winter tires, on the other hand, have been increasing every year (Figure 8-2). 

The number of tires imported from Asia, especially China, is gradually increasing (Figure 11), but prices tend to be relatively low. However, Michelin tires tend to be more expensive in terms of both quality and price, so Michelin needs to keep guaranteeing differentiation and customer satisfaction to customers in order to avoid losing customers to Chinese competitors. Michelin has one of only three R&D facilities in the world and one of them in Japan, so Michelin needs to use this advantage and its unique development technology to continue marketing in Japan.

conclusion

Michelin did not use a unique marketing method in Japan unlike other case in other business sectors, but in the Japanese tire industry, which originally had many domestic competitors, Michelin used its own development capabilities to find sales opportunities outside of new cars. By inventing a tire that could be used in any season, Michelin was able to solve the dissatisfaction that the Japanese people had with their tires and, as a result, succeed with a technology that its competitors did not have.

Akira NIIMI

Source

Tire brands in Japan and their features (posted on 2020, 29^th May) Car-nalism [Online]

https://matome.response.jp/articles/2444

Michelin Japan Official Home Page [Online]

https://job.michelin.co.jp/en/discover-michelin/michelin_japan

Horaguchi, H., Shimokawa, K., (2002). “Japanese Foreign Direct Investment” Springer-Verlag Tokyo [Online]

https://books.google.fr/books?id=g2ToCAAAQBAJ&pg=PA5&lpg=PA5&dq=michelin+tire+strategy+japan&source=bl&ots=L7YLwQHx4h&sig=ACfU3U19mvzv1ojFUZUakne0RudcrO2mMg&hl=ja&sa=X&sqi=2&ved=2ahUKEwiR_4iX4JL0AhUkl2oFHWLwAwUQ6AF6BAgdEAM#v=onepage&q=michelin%20tire%20strategy%20japan&f=false

 

Citing source

¹imarc. Japan Tyre Market: Industry Trends, Share, Size, Growth, Opportunity and Forecast 2021-2026 [Online] (accessed on 12/01/2021)

https://www.imarcgroup.com/japan-tyre-market

²JATMA. “TYRE INDUSTRY IN JAPAN 2019” [Online] (accessed on 12/01/2021)

https://www.jatma.or.jp/media/pdf/tyre_industry_2019.pdf