The term "Japanese domestic market" refers to Japan's home market for vehicles. For the importer, these terms refer to vehicles and parts designed to conform to Japanese regulations and to suit Japanese buyers.
Compared to the United States where vehicle owners are now owning vehicles for a longer period of time, with the average age of the American vehicle fleet at 10.8 years, Japanese owners contend with a strict motor vehicle inspection and gray markets. According to the Fédération Internationale de l'Automobile, a car in Japan travels a yearly average of over only 9,300 kilometers (5,800 miles), less than half the U.S. average of 19,100 kilometers (12,000 miles).
Japanese domestic market vehicles may differ greatly from the cars that Japanese manufacturers build for export and vehicles derived from the same platforms built in other countries. The Japanese car owner looks more toward innovation than long-term ownership which forces Japanese carmakers to refine new technologies and designs first in domestic vehicles. For instance, the 2003 Honda Inspire featured the first application of Honda's Variable Cylinder Management. However, the 2003 Honda Accord V6, which was the same basic vehicle, primarily intended for the North American market, did not feature VCM, which had a poor reputation after Cadillac's attempt in the 1980s with the V8-6-4 engine. VCM was successfully introduced to the Accord V6 in its redesign for 2008.
In 1988, JDM cars were limited by voluntary self-restraints among manufacturers to 280 horsepower (PS) (276 hp) and a top speed of 180 km/h (111.8 mph), limits imposed by the Japan Automobile Manufacturers Association (JAMA) for safety. The horsepower limit was lifted in 2004 but the speed limit of 180 km/h (111.8 mph) remains in effect. Many JDM cars have speedometers that register up to 180 km/h (111.8 mph) (certain Nissans go up to 190 km/h, and the GT-R has a mechanism that removes the speed limiter on a track) but all have speed limiters.
Japanese carmakers do not use a Vehicle Identification Number as is common overseas. Instead, Japan uses a Frame Number--nine to twelve alphanumeric characters identifying model and serial number. For example, Frame Number SV30-0169266 breaks down as "V30" identifying the model as Toyota Camry/Vista x30; "S" identifying the engine (4S-FE), and "0169266" being the serial number of the vehicle. Vehicle make is not identified but slight number variations can identify the carmaker, i.e. Toyota usually uses seven digits for its serial numbers while Nissan uses six. Because a frame number contains far less information than a VIN, JDM vehicles also use a Model Code. As an example, SV30-BTPNK breaks down as "SV30", which means the same as above, and "BTPNK" which designates a set of features incorporated in the vehicle.
The Japanese domestic market has been growing significantly since the late 90's. Many car enthusiasts are attracted to the Japanese domestic market in different continents such as North America, Europe, and Asia. Popular brands include Honda, Subaru, Toyota, Mazda, Mitsubishi Motors and Nissan with iconic cars such as the Honda S2000, Subaru Impreza WRX STI, Mitsubishi Lancer, Mazda RX-7. Mazda MX-5, Nissan 300ZX, Nissan Skyline GT-R, Honda NSX, Honda Integra Type-R, Toyota Supra, and Civic Type R.
There is a huge following of JDM cars in Canada due to the 15-year rule now making most of the highly sought after imports legal and importable.
JHPUSA.COM formally known as JDMHONDAPARTS.COM helped make JDM a common term. After that Super Street Magazine's Jonathan Wong also helped popularise the term. 
There is a common misconception that a "JDM car" refers to any car of Japanese origin. However an American market car such as 240sx is not a Japanese domestic market car as it was sold in the American domestic market. However the 240sx's Japanese market counterpart the Nissan Silvia is a true JDM car as it was officially sold to the Japanese market via Nissan.