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Whatever initially drove Japan's automakers to become the world's most successful exporters, they now have even more urgent reasons to sell beyond their borders: Their own domestic market is withering.
Those gloomy demographics have forced Japan's automakers to focus on overseas markets, where vehicle sales are growing. Even in other mature markets, such as the United States and Europe, auto sales are expected to increase slowly over the long term.

Japan is still the world's second-largest passenger car market, and third-largest in total vehicle sales after the United States and China. But its auto sales peaked in 1990 during the "asset bubble" that burst a year later, plunging Japan into a long recession. Its economy is slowly recovering, but car sales haven't. They were down in September for an 18th consecutive month. Excluding mini-vehicles -- tiny cars powered by motorcycle-size engines -- sales have been declining for 27 months.

"The combination of the population decline and the economy, which has been slower than expected in picking up, is dampening the market for longer than we expected," said Yuki Funo, a Toyota Motor Corp. board member and chairman of its U.S. sales operation. "It's not good."
By contrast, U.S. automakers have given up on Japan, where imports are mostly German premium cars and account for only around 5 percent of total sales.

In past years, the Japanese resorted to outright protectionism and currency manipulation to push back foreign rivals. But in recent years, the cutthroat competition and slim rewards in Japan have discouraged most outsiders.

General Motors Corp. recently sold its equity stakes in three Japanese automakers and is concentrating on the booming Chinese market. Ford Motor Co. owns a controlling stake in Mazda Motor Corp., which develops car platforms for Ford. But the Dearborn automaker sells only 5,000 Ford-brand vehicles in Japan a year.

At the Tokyo Motor Show opening this week, Ford will display a few "all-American" models such as the Mustang muscle car and Explorer SUV, and will unveil a brawny Escape Adventure concept.

"There's a core group of consumers who do want to be different, who want something that reflects the adventurous American lifestyle," said Randy Krieger, president of Ford Japan.
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