Japanese car companies are some of the world's most-advanced in many ways, and they are sustaining that market-leading position in the introduction of "smart-car" technology.
Japan is already miles ahead of the rest of the world when it comes to automatic braking, with such systems now installed on 80% of new vehicles. Insurers are offering 9% discounts on vehicles with collision-avoidance systems, boosting the share of new vehicles with them to 95% or so.
Industry-wide, any uptake of autonomous-driving technology will come on new cars, Nomura states in a report on the topic, due to price and re-purposing constraints. But the brokerage anticipates that the number of vehicles sold with autonomous technology will rise rapidly, from 40,000 vehicles in fiscal 2016, which ran through March, or 1% of cars sold, to 1.75 million vehicles by 2022, or 52% of new vehicles.
That's after the Tokyo Olympics. The Japanese government wants to use the event to showcase Japanese technology, so it's likely to introduce legislation and infrastructure to boost the use of such cars.
Companies will comply, to compete.
Fuji Heavy Industries, a subsidiary of Subaru (FUJHY) , offers its EyeSight technology -- introduced in 2010 -- on most of its models for an extra price of just ¥100,000 ($890). That move helped it boost sales volumes by 64% and gain market share. The company is a smaller player, but captured hearts and minds by moving ahead of its competitors. Even in a mature car market like Japan, commercial technological advances that improve safety are clearly in demand.
Fuji also has an Active Lane Keep system, which automatically steers vehicles to the middle of the lane when they are going faster than 40 mph. Its next step will be to introduce automatic lane changing, with a next-gen EyeSight due in 2017. It's likely to stay ahead of competitors, since it uses reasonably priced stereo cameras in its systems, instead of the high-priced sensors that other car makers are studying.
Nissan Motor (NSANY) has announced an "ambitious" schedule for developing autonomous-vehicle technology, Nomura says. It has already introduced its ProPilot single-lane self-drive system for expressways on its Serena minivan, which is extremely popular in Asia. Sales of the new version are up 34% compared to the previous generation, to 65,000 minivans, 56% of them with the system.
The company now plans to install ProPilot in QX50 SUVs and its electric Leaf models, as well as the Qashqai SUV for the European market. Next year should see it run out multi-lane self-driving technology, involving lane changes, with the biggest test -- urban-road self-drive cars -- due for 2020.
Toyota Motor (TM) holds the technological lead, to fit its market-leading position. Only Bosch has more patents (2,710) than Toyota's 2,061, although when you include those held by its suppliers Denso (DNZOY) and Aisin Seiki (ASEKY) that crests to 3,472. The Nissan-Renault-Mitsubishi partnership ranks next with 1,266. Honda and Nissan not far behind.
The big risk for Toyota is its outsized insistence on safety, which is slowing progress, Nomura says. While obviously "getting things wrong would be unacceptable," Nomura analyst Masataka Kunugimoto concedes, Silicon Valley-style innovation may run ahead of the Japanese carmaker. That's even though the Toyota Research Institute is based in the Valley itself.
Where Toyota is going it alone, Honda Motor (HMC) has an R&D Center X that focuses on collaboration with third parties, which it hopes will accelerate its speed to market. One example is a partnership with Waymo, the self-drive R&D subsidiary of Alphabet subsidiary Google (GOOGL) , which is part of the Action Alerts PLUS charity portfolio that Jim Cramer co-manages.
Nissan is also open to outside ideas. It has alliances with suppliers such as Hitachi T:6501 as well as tech companies including Microsoft (MSFT) , and even NASA.
The administration of Shinzo Abe is not alone in a strong Asian push for automated cars.
The governments of Singapore and South Korea are both actively advancing the development of self-drive cars in those countries. Singapore is allowing tests of driverless taxis with the aim of introducing public tests and potentially a fleet of such vehicles. Cars from Renault (RNLSY) , Mitsubishi (MSBHY) and now Peugeot (PUGOY) will be driving themselves around Singapore's streets.
South Korea has approved 19 companies to test self-driving cars. Its latest move, as I explained yesterday, is to clear Samsung Electronics (SSNLF) to test "smart car parts" and its algorithm, which it says performs particularly well in bad weather. It will provide parts for a Hyundai Motor (HYMTF) sedan. But Samsung says its interest stops at supplying sensors and computing power, rather than building whole cars.
Will NASA help out Japan? Space can surely wait. Self-drive cars await on the road to the Tokyo Games in 2020.