In Japanese market, passenger car population shrinking significantly
and period of ownership getting longer
Creating attractive cars is key to rekindling demand (JAMA Survey)

  Japan's new car sales reduced 113,000 even in recovered economy in 2006. The decrease counts one million from 1997. According to JAMA estimates, the sales continue to reduce also in 2007 staying around 5.63 million.

  The growth in the number of vehicles owned which affects on new car sales in a medium term looks further sluggish. The increment in 2006 stayed at 173,000. Above all, the growth in number of passenger cars owned had been slowed down since the end of the 1990s, and finally the number showed a significant reduction of 476,000 in 2006 (excluding mini). Additionally to the slowed down growth (or even decline), the elongation of ownership duration is on the move, therefore, there is no factors left to support an expansion of new car sales.

  Looking at this circumstance, JAMA's survey report released in April 2007 addresses a new stage to search the way to create attractive automobiles which are capable to produce new demands for the brisk market. The types of vehicles suggested as capable to create new demands are, for example, excellent fuel economy vehicles and very low priced vehicles, considering the top 2 answers to the inquiry for the conditions under which the auto users likely study the replacement of their vehicles.

■Japan Market: Sales of New Passenger Cars (excl. mini), Commercial Vehicles (excl. mini) and Mini vehicles	(in 1,000 vehicles)

■Long-term New Car Sales in Japan by Car Category

(in 1,000 vehicles)

	Passenger Car				Truck				Bus	Total (all vehicles)	Excluding Mini		Mini
	Stand- ard	Com- pact	Mini	Total	Stand- ard	Com- pact	Mini	Total			Pas- senger Car	Trucks & buses
1990 1995	575 1,664	4,204 2,555	796 900	5,575 5,119	305 253	789 565	1,006 815	2,101 1,633	23 16	7,789 6,885	4,779 4,219	1,117 833	1,802 1,716
1996 1997	1,778 1,676	2,659 2,589	957 917	5,395 5,182	233 214	577 511	745 695	1,554 1,420	15 14	7,090 6,738	4,437 4,265	825 739	1,702 1,613
1998 1999	1,375 1,253	2,326 2,168	947 1,236	4,648 4,657	144 129	382 338	597 637	1,123 1,104	13 11	5,892 5,871	3,701 3,420	539 478	1,544 1,873
2000 2001	1,323 1,352	2,199 2,164	1,281 1,273	4,802 4,789	131 127	350 332	587 574	1,067 1,033	12 11	5,974 5,917	3,521 3,516	493 470	1,868 1,847
2002 2003	1,174 1,228	2,309 2,188	1,307 1,292	4,790 4,708	119 179	290 346	519 509	928 1,034	11 15	5,801 5,837	3,483 3,416	420 539	1,826 1,801
2003 2004	1,230 1,358	2,194 2,038	1,292 1,372	4,716 4,768	209 187	373 361	509 519	1,091 1,067	21 18	5,828 5,853	3,424 3,396	603 566	1,801 1,891
2005 2006	1,271 1,226	2,090 1,908	1,387 1,508	4,748 4,642	198 209	352 355	537 516	1,086 1,080	18 18	5,852 5,740	3,361 3,134	567 582	1,924 2,024
2007 (forecast)	1,215	1,935	1,483	4,633	160	310	512	982	15	5,630	3,150	485	1,995
Jan.-Mar. 2005	390	642	418	1,450	55	93	151	299	6	1,755	1,033	154	569
Jan.-Mar. 2006	375	634	448	1,457	57	99	146	302	6	1,765	1,009	162	594
Jan.-Mar. 2007	377	526	469	1,373	50	84	131	266	6	1,644	903	140	601

Sources: JAMA
(Notes) 1.	Figures represent new car registrations based on registration-numbers. Figures exclude large-sized special-purpose vehicles. For detailed information see the table of break down by auto-makers at the end of this report.
2.	The figures in yellow columns given for 2003 or after include special-purpose vehicles such as police vehicles divided into passenger cars, trucks and buses, respectively, according to their vehicle types. The figures in green columns by 2003 include special-purpose vehicles only in the total of all vehicles.
3.	2007 estimates are JAMA estimates (Announced on Dec. 21, 2006) FY 2007 estimates are as follows. (Announced on Mar. 15, 2007)

■FY 2007 Japan Domestic Automobile Demand Estimates (JAMA) (vehicles)   FY2005 FY2006 (estimate) FY2007 (forecast) Increase/Decrease ratio (%) FY2006 FY2007 Passenger Car Standard 1,256,385 1,233,000 1,225,000 98.1 99.4 Compact 2,081,711 1,814,000 1,860,000 87.1 102.5 Subtotal 3,338,096 3,047,000 3,085,000 91.3 101.2 Mini 1,417,273 1,524,000 1,490,000 107.5 97.8 Total 4,755,369 4,571,000 4,575,000 96.1 100.1 Truck Standard (of which: Large & Medium) 199,975 105,925 202,000 105,500 151,000 80,000 101 99.6 74.8 75.8 Compact 357,252 340,000 290,000 95.2 85.3 Mini 531,089 504,000 490,000 94.9 97.2 Total 1,088,316 1,046,000 931,000 96.1 89 Bus Large size 6,100 5,600 4,800 91.8 85.7 Compact 11,760 11,000 10,500 93.5 95.5 Total 17,860 16,600 15,300 92.9 92.2 Grand total 5,861,545 5,633,600 5,521,300 96.1 98 Registered vehicle (excluding mini) 3,913,183 3,605,600 3,541,300 92.1 98.2 Mini 1,948,362 2,028,000 1,980,000 104.1 97.6 Sources: JAMA Press Release (Mar. 15, 2007)

■Number of Passenger Cars Owned remarkably reduced by 476,000 in 2006 (excluding mini)

  Japan's number of vehicles owned is still increasing; however, it only had slight gains of 173,000 in 2006. (It gained 926,000 in 2000 and 1,031,000 in 2005.) The increase has been supported by mini vehicles, which increased 844,000 in 2006. (Mini vehicles increased 734,000 in 2000 and 948,000 in 2005.)

  Number of vehicles owned saw slight increase because passenger cars (excluding mini) remarkably reduced by 476,000 in 2006. (Passenger cars increased 314,000 in 2000 and 192,000 in 2005.)

■Number of Vehicles Owned in Japan: Increase/Decrease in Numbers of New Passenger Cars (excl. mini-vehicles), Commercial Vehicles (excl. mini-vehicles) and Mini-vehicles

(in 1,000 vehicles)

■Increase/Decrease of Number of Vehicles Owned in Japan

(in 1,000 vehicles)

	1990	1995	2000	2001	2002	2003	2004	2005	2006
Passenger car (excl. mini)	1712	1270	314	214	119	(147)	(25)	192	(476)
Comercial vehicle (excl. mini)	138	(42)	(181)	(192)	(239)	(296)	(189)	(90)	(172)
Mini vehicles	694	534	734	721	732	715	695	948	844

(Note)

Sources: JAMA materials Break down of the number of vehicles owned: passenger cars (excluding mini) 42,413,000, commercial vehicles (excluding mini) 7,129,000 and mini vehicles 24,711,000.

■Age of Passenger Cars Owned gets old, Nine Years or less old Vehicles reduced by 4.85 million within these 10 Years.

  The passenger car (excluding mini) ownership is not only sluggish in growth but also lengthened in duration, resulting in older age of cars. Within these 10 years, the number of passenger cars owned increased by 3.64 million but the number of passenger cars of which ages are nine years or less reduced by 4.85 million and that of more than nine years increased by 8.50 million.

■Number of Passenger Cars Owned in Japan by Vehicle Age (excluding mini)	(1,000 vehicles)

■Number of Passenger Cars Owned in Japan by Vehicle Age (excluding mini)

(in 1,000 vehicles)

	Ownership at the end of March			Increase/Decrease of ownership
	1996	2001	2006	2001/1996	2006/2001	2006/1996
5 yrs and 3 mos. or less 9 yrs and 3 mos. or less	21,803 13,120	19,782 13,645	17,579 12,492	(2,020) 525	(2,203) (1,153)	(4,224) (628)
13 yrs and 3 mos. or less More than13 yrs and 3 mos.	3,468 713	7,574 1,362	8,835 3,841	4,107 650	1,260 2,479	5,367 3,129
Total	39,103	42,364	42,747	3,262	382	3,644

Sources: Automobile Inspection & Registration Association
(Note)	The classification of passenger cars is based on registration-numbers (excluding special-purpose vehicles). The vehicles owned as of March 31, 2006 and had newly registered in 2001 or later are classified as five years three months old or younger.

  In addition to the slowdown of growth of number of ownership, the lengthened duration of ownership reduced the scrapped vehicles of which replacement demand supported the new car sales (in terms of macro-balance) in the first half of the 2000s. The number of scrapped vehicles increases only in the vehicles of 13 years old or older, which reached a level of one million in FY2005.

■Scrapped Passenger Cars by Age in Japan: Number of Scrapped Passenger Cars Aged 13 Years or more reached a Level of one million.

■Scrapped cars of five to twelve years old		■Scrapped cars of 13 years old or older
(in 1000 vehicles)		(in 1000 vehicles)

(Note)

Source: Automobile Inspection & Registration Association. Horizontal axis indicates FY1900 to FY2005. The classification of passenger cars is based on registration-numbers. If the scrapping remains in recent three years' pattern, number of scrapped cars of which age is five to twelve will continue to reduce.

  If we see the situation of lengthened ownership in a scrapping rate pattern by vehicle age, we can tell that the duration of ownership has been lengthened in the 2000s and that, for the recent three fiscal years, it still continues.

■Scrapping Passenger Cars in Japan: Transition in Scrapping Pattern by Vehicle Ages

■Making Markets Brisk, Attractive Vehicles which Create Demands are Needed

  While the economy continues the recovery, the growth in the number of cars owned gets sluggish (or reduce) and the duration of ownership is still getting long. This means there is no factors to support the expansion of new car sales.

  Looking at this circumstance, JAMA's survey report released in April 2007 addressed a new stage which needs to develop attractive automobiles which are capable to create new demands for a vivid market, especially for the users whose stance towards cars have diversified.

  The types of vehicles suggested as capable to create new demands are, for example, excellent fuel economy vehicles and very low priced vehicles, considering the top 2 answers to the inquiry for the conditions under which the auto users likely study the replacement of their vehicles.

■Attractive Vehicles to Create New Demands Corresponding Multiple Factors of New Car Sales Recession (JAMA Survey Report)

Trend of domestic new car market	While the economy recovers steadily, domestic new car market continues flat and low. In recent rears, the expense for car purchasing has reduced in household economy. The structure of economy/society and life conditions has changed reflecting the progress of social stratification, urbanization, personalization and so on.
Change starting from the 1990s	Through the 1990s, elderly drivers increased and driving mileage reduced. The lengthened duration of ownership/trend toward used vehicles/down sizing (increase of mini vehicles and compacts) has widened the variety of ownership styles, weakening the tendency toward "buying a new car larger than a mini and replacing it within five years".
Subjects for the new car demands	Cars are losing life-enhancing power against the background of change in consumers' preference. Cars are also losing the indispensability within ones life in the context of urbanization and personalization. Increased tightness of household economy has restrained purchasing new cars.
	To cope with these multiple factors, many kinds of countermeasures are needed. But there is room for promoting the purchase by developing attractive products.
Activation of new car demands	Number of people who take cars as an object of dream or pleasure has slightly reduced. We have entered into the stage where creating demand for cars is necessary.
	Corresponding to users' expectations, such as widened interests (providing something a user can be particular about), deepened classes (responding to the variety of tendency of each stratum of society) and versatile life (enjoying the fusion with information services), it is required to increase the attractiveness of products to affect on the activation of new car demands.

Sources: JAMA "FY2006 Passenger Cars Market Research" (released in Apr. 2007)

(Note)

Listed examples of widened interests are such as reprinting of dreamed cars, individualizing/customizing, specialization for the usage and so on. Examples for deepened classes are cars that are easy to park (metropolitans' use), cars that do not require strained work (elderly persons' use), cars that are easy to handle (ladies' use) and so on. Examples for versatile life are automatic driving, internet connection, communication functions, combinations with ETC service and so on.

■Future of New car Demands

■Current vs. future priority items among 28 car-selection items

(Response rate in %)

	Fuel efficiency	Mainten- ance cost	Environ- mental load	Safety equip- ment	Safety	Driving stability	Ride comfort	Engine perform- ance	Vehicle price
At the purchasing current vehicle	42.5	28.1	10.2	19.4	35.1	25.8	32.4	21.3	59.7
At the purchasing next vehicle	64.4	46.7	22.4	30.3	46.0	33.5	39.6	27.3	65.4

■Conditions to study a replacement: Top 10s of response rate

Excellent fuel economy vehicles	44.8 %
Super low price vehicles	34.6 %
Reduced automobile relating tax	26.5 %
Vehicles free from annoying vehicle inspection, maintenance and repair	25.9 %
Excellent styling and attractive interior design	23.1 %
Environmentally friendly vehicles (super low pollution or easy to recycle)	19.4 %
Super discount vehicle	17.8 %
Vehicles with excellent safety equipment	17.2 %
Vehicles with excellent performance engine	16.8 %
Vehicles with functions to support safety driving like automatic driving and rear end collision protection	12.6 %

■Highly potential users to be targeted for the creation of demand

The baby-boom generation whose ownership has been lengthened because they could not find cars they really want to own.

People in age of the 60s who are seeking for safe and low cost cars

People whose annual household income is JPY 10 million or above and who are particular about goods and seek for nicely styled cars fully equipped with IT technologies.

People whose annual household income is less than JPY five million and want cars of fun with moderate price.

Young people who want cars with attractive style and fusion with information services.

Sources: JAMA "FY2006 Passenger Cars Market Research" (released in Apr. 2007)

■Even in Big Cities, Number of Mini Vehicle Owned is expanding, while Number of Passenger Cars Owned (excluding mini) is reducing.

  New mini vehicle sales reached the record highest of 2.024 million in 2006, and the number of ownership is increasing countrywide even in the area of big cities. On the contrary, the number of passenger cars owned (excluding mini) switched to reduction except Tokai area.

■Increase in numbers of mini vehicles owned by regions	(in 1,000 vehicles)

■Increase/Decrease in number of standard and compact passenger cars owned by regions

(in 1,000 vehicles)

(Notes) 1.

Compiled based on materials from Japan Automobile Dealers Association

2.

The alphabet represents the region (prefectures).A represents Hokkaido/Tohoku includes Hokkaido, Miyagi, Fukushima, Iwate, Aomori, Niigata, Nagano, Yamagata and Akita. B represents Metropolitan/surrounding area includes Tokyo, Kanagawa, Chiba, Saitama, Gunma, Ibaragi, Tochigi and Yamanashi. C represents Tokai includes Aichi, Shizuoka, Gifu and Mie. D represents Hokuriku/Kinki includes, Fukui, Ishikawa, Toyama, Osaka, Hyogo, Kyoto, Nara, Shiga and Wakayama. E represents Chugoku/Shikoku/Kyushu includes Hiroshima, Tottori, Shimane, Okayama, Yamaguchi, four prefectures in Shikoku, seven prefectures in Kyushu and Okinawa.

  Mini market is expanding, but only Daihatsu, Suzuki and newly entered Nissan are significantly increasing number of vehicles owned. Honda continues to expanded, however, the growth is weakened.

■Increase/Decrease in number of mini vehicles owned by auto-makers	(in 1,000 vehicles)
Sources: Japan Mini Vehicle Association

■Number of mini vehicles owned by auto-makers (vehicles)   End of Mar. 1997 End of Mar. 2000 End of Mar. 2003 End of Mar. 2006 Increase/Decrease for every three years 2000/1997 2003/2000 2006/2003 Daihatsu 4,282,388 4,712,502 5,389,991 6,265,647 430,114 677,489 875,656 Mazda 579,922 615,205 626,570 646,442 35,283 11,365 19,872 Mitsubishi 2,865,259 3,060,925 3,245,751 3,246,680 195,666 184,826 929 Subaru 2,385,078 2,346,265 2,369,737 2,381,892 (38,813) 23,472 12,155 Honda 2,310,101 2,661,166 3,124,756 3,502,379 351,065 463,590 377,623 Suzuki 5,325,770 5,873,815 6,610,591 7,424,072 548,045 736,776 813,481 Nissan     47,431 313,850     47,431 266,419 Others 9,894 29,129 49,368 61,720 19,235 20,239 12,352 Total 17,758,412 19299007 21,464,195 23,842,682 1,540,595 2,165,188 2,378,487 Sources: Japan Mini Vehicle Association

(Reference) ■ New car sales in Japan by vehicle types and auto-makers

(vehicles)

		Passenger Car			Truck			Bus	All types total
		Standard	Compact	Mini	Standard	Compact	Mini
Toyota	2004 2005 2006	546,882 499,616 533,169	1,028,049 1,018,164 957,622		16,175 19,781 21,437	162,367 170,924 174,362		5,530 4,993 4,887	1,759,003 1,713,478 1,691,477
	2006.1-3 2007.1-3	163,433 168,010	315,289 263,242		5,766 5,493	46,096 43,923		1,469 1,709	532,053 482,377
Nissan	2004 2005 2006	189,804 169,453 131,697	443,212 491,601 407,200	59,032 82,542 109,514	7,557 6,057 5,710	98,096 88,824 84,071	24,729 23,908 25,151	4,449 3,841 3,420	826,879 866,226 766,763
	2006.1-3 2007.1-3	40,534 50,401	154,620 113,391	36,431 46,230	1,875 1,415	25,536 21,677	8,214 7,560	1,373 1,128	268,583 241,802
Honda	2004 2005 2006	204,547 158,358 125,685	274,212 306,636 289,190	211,859 199,731 234,720	4 7	2,689 2,275 2,774	49,826 47,111 49,915		743,133 714,115 702,291
	2006.1-3 2007.1-3	39,040 34,771	81,579 76,217	53,131 53,034	2	480 723	10,023 8,798		184,253 173,545
Mazda	2004 2005 2006	95,908 110,519 102,443	100,526 85,565 73,555	42,541 42,862 43,376	1,583 2,376 2,447	31,689 36,513 36,053	8,336 9,084 11,278		280,583 286,919 269,152
	2006.1-3 2007.1-3	33,797 32,076	24,590 22,167	14,665 13,450	663 359	10,756 7,686	3,175 3,321		87,646 79,059
Mitsubishi	2004 2005 2006	25,865 30,008 35,349	49,753 45,921 36,083	109,362 98,564 124,570	323	6,730 6,981 6,997	63,530 62,777 60,166		255,240 244,251 263,488
	2006.1-3 2007.1-3	14,670 16,898	13,424 8,509	44,660 34,155	208	1,986 1,629	18,608 14,894		93,348 76,293
Isuzu	2004 2005 2006	54 44 36			52,896 62,882 67,509	26,871 19,490 22,655		1,158 1,781 1,782	80,979 84,197 91,982
	2006.1-3 2007.1-3	11 5			18,789 15,988	6,646 4,061		749 477	26,195 20,531
Daihatsu	2004 2005 2006	139 114 142	15,409 12,446 21,071	427,095 433,049 460,484		924 14	134,242 155,531 140,787		577,809 601,154 622,484
	2006.1-3 2007.1-3	17 26	5,444 4,145	137,798 154,883			39,323 37,173		182,582 196,227
Subaru	2004 2005 2006	93,390 86,718 71,786	19,468 21,931 21,256	77,460 62,720 70,868			88,105 86,848 81,324		278,423 258,217 245,234
	2006.1-3 2007.1-3	24,779 18,477	6,978 8,175	15,770 22,577			23,138 21,688		70,665 70,917
Suzuki	2004 2005 2006	5,404 10,962 16,585	63,323 66,391 63,086	443,411 467,173 464,037			149,997 151,261 147,325		662,135 695,787 691,033
	2006.1-3 2007.1-3	3,293 5,079	20,389 20,168	145,256 144,949			43,411 37,842		212,349 208,038
Nissan Diesel	2004 2005 2006				18,754 20,518 18,824	210 111 141		740 778 789	19,704 21,407 19,754
	2006.1-3 2007.1-3				6,215 4,788	38 13		291 242	6,544 5,043
Hino	2004 2005 2006				39,603 42,478 43,840	8,522 8,685 6,966		2,777 3,365 3,146	50,902 54,528 53,952
	2006.1-3 2007.1-3				13,119 12,307	1,916 1,389		1,128 1,162	16,163 14,858
Mitsubihi Fuso	2004 2005 2006				46,481 40,330 47,027	23,344 17,882 20,844		3,468 2,959 3,543	73,293 61,171 71,414
	2006.1-3 2007.1-3				10,109 8,920	5,126 3,316		1,158 902	16,393 13,138
Others	2004 2005 2006	196,288 205,557 208,975	43,815 41,337 39,204	1,323 427 29	3,539 3,122 2,159	7 9 7	302 128 75	25 37 33	245,299 250,617 250,482
	2006.1-3 2007.1-3	55,916 51,701	11,570 9,910	7 7	542 362	2	5 5	8	68,048 61,987
Total	2004 2005 2006	1,358,281 1,271,349 1,225,867	2,037,767 2,089,992 1,908,267	1,372,083 1,387,068 1,507,598	186,588 197,548 209,283	361,449 351,708 354,870	519,067 536,648 516,021	18,147 17,754 17,600	5,853,382 5,852,067 5,739,506
	2006.1-3 2007.1-3	375,490 377,444	633,883 525,924	447,718 469,285	57,078 49,842	98,580 84,419	145,897 131,281	6,176 5,620	1,764,822 1,643,815

Sources: Japan Automobile Dealers Association

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