According to Nikkei, data released by Japan's Ministry of Finance shows that in May, the average export price per Japanese car shipped to the United States dropped by more than 20% year-on-year. This sharp decline is likely due to automakers absorbing the effects of the Trump-era tariffs in order to maintain competitive pricing in the U.S. market.
Japan's total exports to the U.S. in May amounted to 1.51 trillion yen (approximately $10.4 billion), a decrease of 11.1% compared to the same month last year. Automotive exports fell by 24.7% to around 363.4 billion yen. The number of vehicles exported to the U.S. also declined by 3.9% to 102,653 units-the first decline in five months-though the drop in volume was smaller than the drop in value. Dividing the export value by the quantity, the average export price per vehicle came to about 3.54 million yen, marking a 21.7% year-on-year decrease.
Nikkei reports that this marks the third consecutive month of accelerating declines in Japan's car export prices to the U.S. In March, the average export price fell by 1.5% year-on-year, followed by a 14.8% drop in April. A government official responsible for trade statistics noted that while exchange rate fluctuations partially contributed to the May decline, "the decrease goes far beyond that," and that "exporters appear to be making adjustments." The yen averaged 144 to the dollar in May, appreciating 7.4% from a year earlier.
Similar trends were reflected in the Bank of Japan's Corporate Goods Price Index. The May index, released last week, showed that passenger vehicle prices exported to North America in yen terms dropped 24.9%. Even when calculated in contract currency-minimizing the effect of exchange rates-prices still fell by 18.9%, with the pace of decline accelerating compared to April in both cases.
On April 3, the U.S. imposed a 25% tariff on imported automobiles, followed by a 10% "reciprocal" tariff on most countries starting April 5. Taro Saito from the NLI Research Institute commented, "Japanese automakers are clearly absorbing the higher tariffs by lowering their export prices."
Toyota Motor Corporation has announced it plans to maintain its pricing in the U.S. for now. An executive stated in May, "We won't hastily raise prices over short-term tariff issues," adding that the company will continue shipping vehicles from Japan to the U.S. Sanshiro Fukao, a researcher at the Itochu Research Institute, explained that "the unpredictability of tariff negotiations makes it difficult for automakers to adjust prices easily."
However, not all Japanese carmakers are holding prices steady. For example, Subaru-which imports about half of its U.S.-sold vehicles from Japan-has already raised prices. Lowering export prices reduces company profits, while passing costs onto consumers risks weakening competitiveness in the U.S. market.
Last week, a joint survey by Japan's Cabinet Office and Ministry of Finance revealed that the Business Sentiment Index for large enterprises turned negative for the first time in five quarters during the April-June period. The automotive and auto parts manufacturing sector showed a steep drop to -16.1, pulling down the overall sentiment index. Fukao added, "For mid-sized automakers that heavily rely on the U.S. market, the business outlook is becoming increasingly harsh."
