Outlook of Japanese market in 2014 (Japanese market analysis Part 1)

Abenomics and pre-buying demand before VAT hike encouraged 2013 sales

2014/01/31

Summary

 The 2013 vehicle sales in Japan exceeded the forecast made by the Japan Automobile Manufacturers Association (JAMA) at the beginning of the year (4,740,000 units) by 636,000 units to mark 5,376,000 units. The strong sales were supported by an increased consumer spending under the "Abenomics" scheme and last-minute demand before the consumption tax hike (Japanese consumption tax will be raised from the current 5% to 8% in April 2014). JAMA forecasts that the vehicle sales in 2014 will decrease to 4.85 million units, down by 9.8% year-over-year (y/y) due to the tax hike. Therefore, each automaker plans to cope with the anticipated decline by launching new models.
 The leading Toyota's share in Japanese passenger car market decreased by 2.4 percentage points to 30.3% in Japan. Meanwhile Honda and Suzuki increased their shares by 0.4 and 0.6 percentage points to 16.0% and 12.2%, respectively, thanks to good sales of mini vehicles. This report specifies 2013 vehicle sales and 2014 outlook, as well as vehicle tax revision in Japan.


Graph 1: Jpn new vehicle sales Graph 2: Share


Related reports:
•2013 Sales by model & engine displacement (Japanese market analysis Part 2)



2014 sales outlook

 Regarding the 2014 sales outlook in Japan, Japanese automakers are concerned about decline in demand. The consumption tax will be raised from the current 5% to 8% in April 2014. There will be last-minute demand until March 2014, but after that demand will be weaker. Each automaker, however, is aiming to cope with the anticipated decline by launching new models and expanding their lineups.

2014 sales outlook in Japan

Japan Automobile Manufacturers Association(JAMA) •Total sales volume:
 4.85 million units(down 9.8% y/y)
•Non-mini vehicles:
 3 million units(down 8.0% y/y)
•Mini vehicles:
 1.85 million units(down 12.4% y/y)
 Although the market will be supported by the increase of exports, investments by various companies and the government's economic stimulus packages, the increase of consumption tax will affect the consumer confidence negatively. In addition, downturn is anticipated after the strong pre-tax demand in the latter half of 2013 is over. Regarding the sales volume, total vehicle sales is expected to decrease to 4.85 million units, 9.8% down compared to 2013 level; of which Non-mini vehicle is expected to be at 3 million units (down 8% y/y) and mini vehicles at 1.85 million units (down 12.4% y/y). (Announced on January 30, 2014)
Japan Light Motor Vehicle and Motorcycle Association •Mini vehicle demand forecast:
 1.85 million units (down 12.3% y/y)
 The 2014 mini vehicle demand is expected to decrease by 12.3% y/y to 1.85 million units. There are concerns over slump after rush demand before tax hike is over. Meanwhile, the association also points out the possibility of a higher demand than the forecast due to lineup enhancement by each automaker and last-minute demand before the mini vehicle tax increase in April 2015. (Announced on January 22, 2014)
Nikkan Jidosha Shimbun •Non-mini vehicles:
 2.94 million units (down 9.5% y/y)
•Mini vehicles:
 2.13 million units (up 2.9% y/y)
•Medium-duty trucks:
 69,000 units (down 5.5% y/y)
 Forecasts that the sales of non-mini vehicles in Japan will decrease by 9.5% y/y to 2.94 million units; those of mini vehicles will increase by 2.9% y/y to 2.13 million units; and those of medium-duty trucks will decrease by 5.5% y/y to 69,000 units. (Announced on January 1, 2014)

Source: Press releases, Nikkan Jidosha Shimbun、Nikkei Shimbun

2014 sales plan of Japanese car makers

Toyota •Total plan for Toyota, Daihatsu, and Hino:
2.18 million units (down 5% y/y)
 In the 2014 sales plan in Japan, the Toyota brand sets its target at 1.5 million units (down 5% y/y), the Daihatsu brand at 630,000 units (down 4% y/y), and the Hino brand at 50,000 units (up 2% y/y). In total, they plan to sell 2.18 million units, down 5% y/y. (Announced on January 23, 2014)
Honda •Plans to sell 1.03 million units (up 21% y/y)  Plans to sell 1.03 million units in Japan in 2014, an increase of 21% from its 2013 plan. Honda aims to achieve its goal by launching six new models, including the Legend, a high-end sedan equipped with a hybrid vehicle system dedicated to large-sized vehicles, and the redesigned Step Wagon. (Reported on January 6, 2014)
Fuji Heavy Industries (Subaru) •Plans to sell 185,000 units (up 2% y/y)  Plans to sell 185,000 units in 2014, up 2% y/y, with sales increase expected from the Levorg to be launched in May. (Announced on January 15, 2014)

Source: Press releases

 

Remarks from Japanese automakers' executives about the Japanese market outlook in 2014

Toyota  In spite of influence from the consumption tax increase, the current deflation is sure to be solved. Toyota, as a company, is aiming to achieve sustainable growth by continuing "to produce ever-better vehicles". We believe that the market conditions are steadily improving and thus expect a continuous solid demand for vehicles. Demand decline after the consumption tax hike is supposed to be limited as each automaker launch new models from April to June. (Reported on January 9 and 20, 2014)
Honda The recovery trend in the Japanese economy has led to an upturn in consumer confidence. Each automaker's initiative to enhance their product lineups will also pay off. The Japanese market is expected not to decline significantly from the 2013 results, but to reach the 5 million-unit level. It is assumed that demand decline after April will not be so extensive and that relatively steady demand will be maintained for the year. (Reported on January 8, 2014)
Nissan From January to March 2014, considerable rush demand is expected as in last December, at a pace like 25% higher than the previous year. In response, substantial demand decline is assumed in the following three months or so. But we cannot decrease our production in April or May because it leads to reduction in our suppliers' business. As for vehicle demand, certain downturn is anticipated in April and following month(s) within the fiscal year ending in March 2015 (FY 2014). The demand, however, is expected to recover in the second half of FY 2014 at the latest, backed by several positive factors including new models to be launched by each automaker. (Reported on January 9 and 20, 2014)
Suzuki  The current good sales will continue up to March, but pretty tough sales are expected in April and later. A large slump is likely to occur after the consumption tax hike and it will be difficult to recover in autumn, or by the end of the year. We had much higher sales than expected during the new year period, but it may be thanks to a newly launched model. It is unpredictable how much rush demand and downturn after that will occur, and that's a concern. (Reported on January 9, 2014)
Japan Automobile Importers Association  The imported car industry has maintained good sales thanks to new models introduced by each importer. Following the rush demand before the consumption tax increase, certain drop is predicted, but only temporarily. As stock prices have been stable and the Japanese economy has shown a strong recovery sign, consumers' purchasing power is unlikely to fall. Sales in 2014 are estimated at 280,000 units, equivalent to 2013 level, with release of new models to spur demand and expansion of sales networks. (Reported on January 9 and 14, 2014)

Source: Nikkan Jidosha Shimbun, press releases and articles of each car makers



New vehicle sales in 2013

 In 2013, the sales of vehicles (passenger cars + commercial vehicles) in Japan increased two years in a row by 0.1% y/y to 5,376,000 units. Among them, mini vehicles marked the record high sales of 2,113,000 units, an increase of 6.8% y/y. Value-added models have sold well, including the Honda N Series with spacious passenger and luggage space and the Daihatsu Move equipped with a radar braking system for mitigating collision damage. Mini vehicles accounted for 39.3% of the total sales, an increase of 2.4 percentage points y/y, while the sales of non-mini vehicles reduced by 3.7% y/y to 3,263,000 units.

 

Japanese sales by vehicle type

(1,000 units)
2006 2007 2008 2009 2010 2011 2012 2013 2014
Forecast
Car Standard 1,226 1,299 1,251 1,160 1,420 1,140 1,412 1,399 2,610
Small 1,908 1,654 1,550 1,480 1,508 1,246 1,603 1,473
Mini 1,508 1,447 1,427 1,283 1,285 1,139 1,558 1,690 1,470
Sub-total 4,642 4,400 4,228 3,924 4,212 3,525 4,573 4,562 4,080
Truck Standard 209 172 147 88 102 107 136 143 151
Small 355 293 250 181 188 185 227 236 228
Mini 516 473 443 405 442 382 422 423 380
Sub-total 1,080 938 839 673 731 675 785 802 759
Bus 18 16 15 13 13 11 12 11 11
All Non-mini 3,716 3,434 3,212 2,921 3,230 2,689 3,390 3,263 3,000
Mini(B) 2,024 1,920 1,870 1,688 1,726 1,521 1,979 2,113 1,850
Total(A) 5,739 5,354 5,082 4,609 4,956 4,210 5,369 5,376 4,850
Ratio of Mini(=B/A) 35.3% 35.9% 36.8% 36.6% 34.8% 36.1% 36.9% 39.3% 38.1%

Source: Japan Automobile Dealers Association and Japan Automobile Manufacturers Association

 In terms of the monthly sales in 2013, the figures in the first half decreased from the last year, partly due to demand decline after the subsidy termination. Since September, on the other hand, the figures increased from the same month last year thanks to a revitalized Japanese economy and last-minute demand before the consumption tax hike.

Japanese monthly sales (all vehicle types)

Unit Sales
(1,000 units)
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
2008 377 503 731 369 361 447 455 310 477 379 369 306 5,082
2009 302 381 546 284 292 382 431 309 478 396 437 373 4,609
2010 367 458 674 352 356 449 487 425 472 304 324 288 4,956
2011 305 401 438 186 237 352 373 330 462 381 396 349 4,210
2012 416 520 752 360 395 505 513 371 447 359 394 339 5,369
2013 384 477 667 365 368 451 472 367 523 422 457 423 5,376
Year-over-year
2009 (19.9%) (24.3%) (25.3%) (23.0%) (19.0%) (14.5%) (5.2%) (0.5%) 0.2% 4.4% 18.3% 21.6% (9.3%)
2010 21.5% 20.4% 23.5% 24.1% 22.0% 17.4% 12.9% 37.7% (1.2%) (23.1%) (25.9%) (22.7%) 7.5%
2011 (16.7%) (12.4%) (35.1%) (47.3%) (33.4%) (21.6%) (23.3%) (22.4%) (2.1%) 25.5% 22.2% 21.2% (15.1%)
2012 36.1% 29.5% 71.8% 93.7% 66.4% 43.6% 37.5% 12.4% (3.4%) (5.7%) (0.4%) (61.5%) 13.3%
2013 (7.7%) (8.2%) (11.3%) 1.5% (6.8%) (10.7%) (8.0%) (1.0%) 17.1% 17.5% 16.0% 25.0% 0.1%

Source: Japan Automobile Dealers Association and Japan Mini Vehicles Association
Note: Figures in brackets (  ) indicate a negative value.

 

 



Passenger car market: Honda increased mini vehicle sales and share

 In 2013, passenger car sales decreased by 0.2% y/y to 4,562,000 units. As of January 2013, the JAMA estimated it at 3,984,000 units, but the figure resulted in almost the same level as the last year.
 The sales of non-mini vehicle decreased by 4.7% to 2,872,000 units. In particular, the Toyota brand showed a large decrease of 112,000 units from the last year, partly because the sales of the Prius dropped by 20% y/y. The share of "Others", mostly consisted of imported non-mini vehicles, increased by 1.8 percentage points y/y to 9.7%. Imported cars are enjoying high popularity, including the fully redesigned VW Golf, which won the Japan Car of the Year award.
 The sales of mini vehicles were strong and increased by 8.5% y/y to 1.69 million units. Especially, Honda enjoyed strong sales of the N Series including the N-BOX and N-ONE and increased its sales by 29.3% y/y to 373,000 units, a significant increase for the second consecutive year. Daihatsu held on to the top position in the mini vehicle market with sales of 517,000 units, but the sales decreased by 32,000 units from the last year.
 By brand, the leading Toyota's share dropped in 2013 by 2.4 percentage points to 30.3%. Honda, which expanded its mini vehicle share for two consecutive years, won the second largest share of 16.0%, followed by Nissan's 12.6% and Suzuki's 12.2%.

Passenger car sales volume and share by group in the Japanese market

Sales volume(1,000 units) Share(%)
2009 2010 2011 2012 2013 2009 2010 2011 2012 2013
Passenger car total
Toyota 1,238 1,415 1,038 1,494 1,382 31.6 33.6 29.5 32.7 30.3
Honda 596 600 477 713 729 15.2 14.3 13.5 15.6 16.0
Nissan 520 566 515 561 575 13.3 13.4 14.6 12.3 12.6
Suzuki 485 484 437 530 559 12.4 11.5 12.4 11.6 12.2
Daihatsu 475 477 430 551 519 12.1 11.3 12.2 12.1 11.4
Mazda 176 196 165 192 202 4.5 4.6 4.7 4.2 4.4
Fuji Heavy Industries 120 123 108 141 164 3.1 2.9 3.1 3.1 3.6
Mitsubishi 119 132 109 107 107 3.0 3.1 3.1 2.3 2.3
Lexus 28 33 42 44 47 0.7 0.8 1.2 1.0 1.0
Others 167 186 204 240 279 4.2 4.4 5.8 5.2 6.1
Total 3,924 4,212 3,525 4,572 4,562 100.0 100.0 100.0 100.0 100.0
Non-mini vehicles
Toyota 1,238 1,415 1,032 1,462 1,352 46.9 48.3 43.3 48.5 47.1
Honda 462 486 378 424 356 17.5 16.6 15.9 14.1 12.4
Nissan 407 442 392 437 421 15.4 15.1 16.4 14.5 14.7
Suzuki 65 58 77 88 79 2.5 2.0 3.2 2.9 2.8
Daihatsu 8 6 3 3 3 0.3 0.2 0.1 0.1 0.1
Mazda 137 157 130 151 156 5.2 5.4 5.5 5.0 5.4
Fuji Heavy Industries 75 79 74 108 126 2.9 2.7 3.1 3.6 4.4
Mitsubishi 53 65 53 59 54 2.0 2.2 2.2 1.9 1.9
Lexus 28 33 42 44 47 1.1 1.1 1.8 1.4 1.6
Others 167 186 204 240 279 6.3 6.3 8.6 7.9 9.7
Total 2,640 2,928 2,386 3,015 2,872 100.0 100.0 100.0 100.0 100.0
Minicars
Toyota 0 0 6 32 30 0.0 0.0 0.5 2.1 1.8
Honda 134 115 98 289 373 10.4 8.9 8.6 18.5 22.1
Nissan 113 124 122 124 154 8.8 9.6 10.7 7.9 9.1
Suzuki 421 426 360 442 479 32.8 33.1 31.6 28.4 28.4
Daihatsu 467 471 427 548 517 36.4 36.7 37.5 35.2 30.6
Mazda 39 39 35 42 46 3.0 3.0 3.1 2.7 2.7
Fuji Heavy Industries 44 44 34 33 38 3.4 3.4 3.0 2.1 2.3
Mitsubishi 66 67 57 48 53 5.1 5.2 5.0 3.1 3.1
Lexus 0 0 0 0 0 0.0 0.0 0.0 0.0 0.0
Others 0 0 0 0 0 0.0 0.0 0.0 0.0 0.0
Total 1,283 1,285 1,139 1,558 1,690 100.0 100.0 100.0 100.0 100.0

(Changes)

Sales volume (1,000 units) Share (% point)
2010 2011 2012 2013 2010 2011 2012 2013
Passenger car total
Toyota 177 (377) 456 (112) 2.0 (4.2) 3.2 (2.4)
Honda 5 (124) 236 17 (0.9) (0.7) 2.1 0.4
Nissan 45 (51) 46 14 0.2 1.2 (2.3) 0.3
Suzuki (2) (47) 93 28 (0.9) 0.9 (0.8) 0.6
Daihatsu 3 (48) 122 (32) (0.8) 0.9 (0.1) (0.7)
Mazda 20 (30) 27 10 0.2 0.0 (0.5) 0.2
Fuji Heavy Industries 3 (15) 34 23 (0.1) 0.1 0.0 0.5
Mitsubishi 13 (23) (3) 0 0.1 (0.0) (0.8) 0.0
Lexus 5 9 1 3 0.1 0.4 (0.2) 0.1
Others 19 18 35 39 0.2 1.4 (0.6) 0.9
Total 289 (687) 1,048 (10) 0.0 0.0 0.0 0.0
Non-mini vehicles
Toyota 177 (383) 430 (110) 1.5 (5.1) 5.2 (1.4)
Honda 24 (107) 46 (68) (0.9) (0.7) (1.8) (1.7)
Nissan 35 (50) 45 (16) (0.3) 1.3 (1.9) 0.2
Suzuki (7) 19 11 (9) (0.5) 1.2 (0.3) (0.2)
Daihatsu (2) (3) (0) (0) (0.1) (0.1) (0.0) (0.0)
Mazda 20 (26) 20 5 0.2 0.1 (0.5) 0.4
Fuji Heavy Industries 4 (5) 34 18 (0.2) 0.4 0.5 0.8
Mitsubishi 12 (13) 6 (5) 0.2 (0.0) (0.3) (0.1)
Lexus 5 9 1 3 0.1 0.6 (0.3) 0.2
Others 19 18 35 39 0.0 2.2 (0.6) 1.8
Total 287 (542) 629 (143) 0.0 0.0 0.0 0.0
Minicars
Toyota 0 6 26 (3) 0.0 0.5 1.6 (0.3)
Honda (19) (16) 190 84 (1.5) (0.3) 9.9 3.5
Nissan 10 (2) 2 30 0.8 1.1 (2.8) 1.1
Suzuki 5 (65) 82 37 0.4 (1.5) (3.3) (0.0)
Daihatsu 5 (45) 122 (32) 0.3 0.8 (2.3) (4.6)
Mazda 0 (4) 7 5 0.0 0.1 (0.4) 0.1
Fuji Heavy Industries (1) (10) (1) 5 (0.1) (0.4) (0.8) 0.1
Mitsubishi 1 (10) (9) 5 0.0 (0.2) (1.9) 0.1
Lexus 0 0 0 0 0.0 0.0 0.0 0.0
Others 0 (0) 0 0 0.0 (0.0) (0.0) 0.0
Total 1 (146) 419 132 0.0 0.0 0.0 0.0
Source: Japan Automotive Manufacturers Association (JAMA)
Notes: 1) Includes vehicles manufactured overseas
2) Most of "others" are imported vehicles.
3) There are some differences in the upper table and lower table due to the rounding of numbers.
4) Figures in brackets (  ) indicate a negative value.

 

 



Vehicle tax revision to end acquisition tax and to raise mini vehicle tax

 On December 24, 2013, the cabinet meeting approved the tax revision package for FY 2014. In April 2014, the vehicle acquisition tax will be reduced from 5% to 3% and that for mini vehicles from 3% to 2%. For mini vehicles to be newly acquired in April 2015 and later, on the other hand, the acquisition tax will be increased from the current JPY 7,200 to JPY 10,800. And on April 1, 2014, the consumption tax will be raised from the current 5% to 8% in the first phase of the transition. In October 2015, the tax is planned to be increased to 10% in the second phase.

Consumption tax

On April 1, 2014, the consumption tax will be increased from the current 5% to 8% as the first phase. The second phase is planned for October 2015 to raise the tax to 10%. Details of the latter are reported to be determined by the end of 2014 considering economic trends.

Vehicle acquisition tax

 After the consumption tax is increased to 8% in April 2014, the acquisition tax rates will be reduced as follows. Meanwhile, the eco-car tax deduction program will be enhanced for new vehicles with low exhaust gas emission and high fuel efficiency. When the consumption tax is raised to 10%, the vehicle acquisition tax will be abolished.

Tax rate reduction (in April 2014)
  Current After revision
Private non-mini vehicles 5% 3%
Commercial and mini vehicles 3% 2%

Enhancement of eco-car tax deduction (from April 2014 to March 2015)
  Current After revision
EVs and other green vehicles Tax-free Tax-free
FY 2015 fuel economy standards + 20%
FY 2015 fuel economy standards + 10% 75% tax deduction 80% tax deduction
FY 2015 fuel economy standards 50% tax deduction 60% tax deduction

Vehicle tax

 When the consumption tax is raised to 8%, the green tax program will be extended and enhanced to reduce taxes on vehicles with low exhaust gas emission and high fuel efficiency. In contrast, taxes will be increased on less environmentally-friendly vehicles used over certain years.


Extension and enhancement of the green tax program after the consumption tax hike to 8%
(from April 2014 to March 2016)*
  Current
EVs and other green vehicles 50% tax reduction in general
FY 2015 fuel economy standards +20%   
FY 2015 fuel economy standards +10%
FY 2015 fuel economy standards 25% tax reduction in general
  After revision
EVs and other green vehicles 75% tax reduction in general
FY 2015 fuel economy standards + 20% AND
FY 2020 fuel economy standards    
FY 2015 fuel economy standards + 20% BUT not compliant with
FY 2020 fuel economy standards
50% tax reduction in general
FY 2015 fuel economy standards +10%   
FY 2015 fuel economy standards To be abolished

* Notes: 1) The extra tax rate will be raised generally from 10% to 15% for diesel vehicles aged over 11 years and gasoline and liquefied petroleum gas vehicles aged 13 years or older (excluding EVs, transit buses, and trailers).
2) The current extra tax rate (generally 10%) will be maintained for buses (excluding transit ones) and trucks (excluding trailers).

Environmental performance-based tax deduction and exemption after the consumption tax hike to 10%
(to be considered for FY 2015 tax revision)
・Regarding taxation on vehicle purchase, deduction and exemption will be de considered, with the acquisition cost as the tax base.
・The tax rate will vary between 0 and 3% based on the compliance to fuel economy standards according to the Rationalization in Energy Use Law.
・The green tax program will mainly be targeted for vehicles not eligible for environmental performance-based tax deduction.

Mini vehicle tax

  The tax rate for mini vehicles with at least four wheels or three wheels will be raised by 50% and the new rate will apply to vehicles newly acquired on April 1, 2015 and later. In FY 2016, the tax rate will be changed for mini vehicles with four or three wheels used for 13 years or longer since the initial inspection, and the new rate will apply from April 2016.

Tax rate reduction in April 2015 and later
(JPY)
  Current From April 2015* Age-based extra tax from April 2016**
Passenger use Personal use 7,200 10,800 12,900
Commercial use 5,500 6,900 8,200
Cargo use Personal use 4,000 5,000 6,000
Commercial use 3,000 3,800 4,500
Three-wheeler 3,100 3,900 4,600

Notes: * Only applies to vehicles newly acquired in FY 2015 and later.
** Applies to both already owned and newly acquired vehicles.

Vehicle weight tax

 In April 2016, the weight tax for vehicles eligible for the eco-car tax deduction program (EVs and vehicles satisfying FY 2015 fuel economy standards + 20%) will be changed from the current 50% deduction to complete exemption, which will apply at the second automobile inspection. The program will be enhanced while the consumption tax is 8%. For aged vehicles, on the other hand, taxation will be increased to secure resources for perpetuation of the eco-car subsidy program, road maintenance, and disaster prevention. Personal passenger cars will be taxed annually per 0.5 tons and personal buses and trucks over 2.5 tons per 1.0 tons.

Tax increase for aged vehicles in April 2014
(JPY)
Vehicle age Below 13 years 13 years to below 18 years 18 years and above
Personal passenger cars (per 0.5 tons and year) 4,100 5,000
*5,400 from April 2014
**5,700 from April 2016
6,300
Personal buses and trucks (over 2.5 tons) (per 1.0 tons and year)

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