Alexandru Arba
Research expert covering Japan
Passenger car market in Japan - statistics & facts
The automobile manufacturing industry is a pivotal part of Japan's economy, and passenger cars are its most important segment. Most new vehicle registrations in Japan are passenger cars of domestic brands like Toyota, Suzuki, Daihatsu, or Nissan. While several million passenger car exports accounted for more than half of domestic production, imports stayed within hundreds of thousands in the last few years. Meanwhile, Japanese production overseas has surpassed domestic production. Despite the growing significance of the foreign market, the domestic market has always played an important role for Japanese carmakers, reacting to domestic demands with small, affordable models that have low fuel consumption. Core industry technologies are hybrid-electric engines, as well as safety and autonomous driving systems.
In Japan, private car owners use their vehicles primarily for short to medium trips, such as for nearby shopping, or commuting to work and school. For these purposes, many people appear to prefer smaller cars. Some of the advantages over regular passenger cars include lower prices and maintenance costs, easier parking, and facilitated driving on Japan’s numerous narrow roads.
Japan's domestic car industry is dominated by Japanese manufacturing giants, such as Toyota, and passenger cars are the industry's central segment. Despite a growth in the importance of vehicle manufacturing abroad, the domestic market is going to continue to play a central role in the future development of major Japanese automakers.
Mini cars are a heavy-weight in Japan's car manufacturing industry
In 2024, Japan's best-selling passenger car was the Honda N-Box, a box-shaped mini vehicle that has also led the rankings in the past few years. More than one in three passenger cars used or sold domestically belongs to the Japanese vehicle class of light motor vehicles. The Road Transport Vehicle Law defines these mini vehicles, also known as kei cars, as vehicles with an engine displacement of 660cc or smaller and a measurement not exceeding 3.4m in length, 2m in height, and 1.48m in width.In Japan, private car owners use their vehicles primarily for short to medium trips, such as for nearby shopping, or commuting to work and school. For these purposes, many people appear to prefer smaller cars. Some of the advantages over regular passenger cars include lower prices and maintenance costs, easier parking, and facilitated driving on Japan’s numerous narrow roads.
Automotive electrification in Japan
Reinforcing its commitment to making Japan carbon-neutral by 2050, the Japanese Government raised its reduction target for emissions to 46 percent by 2030 (compared to 2013). The electrification of motor vehicles is part of its so-called "Green Growth Strategy", as automobiles account for roughly 16 percent of Japan’s carbon emissions. Consequently, the Government announced that all new passenger cars shall be electrified by 2035, referring to battery electric vehicles (BEV), fuel cell electric vehicles (FCEV), plug-in hybrid electric vehicles (PHEV), and hybrid electric vehicles (HEV), which already account for a large share of new sales today. HEVs are especially popular and are most often considered for the next car purchase. Fully electric vehicles (BEV), on the other hand, have struggled to show substantial growth in Japan, as consumers remain to be convinced of the upsides of owning such a car.Japan's domestic car industry is dominated by Japanese manufacturing giants, such as Toyota, and passenger cars are the industry's central segment. Despite a growth in the importance of vehicle manufacturing abroad, the domestic market is going to continue to play a central role in the future development of major Japanese automakers.
