FY 2014 Japanese sales outlook exceeds 5.1 million units
Sales of 5.69 million units in FY 2013 triggered by consumer confidence and pre-buying
In the fiscal year ended in March 2014 (FY 2013), vehicle sales in Japan increased by 9.2% year-over-year (y/y) to 5.69 million units. This marks the highest level since FY 2006, when 5.62 million units were sold. The strong sales were thanks to an increased consumer spending under the "Abenomics"economic scheme, new model launches by each automaker, and last-minute demand before the consumption tax hike that started in April 2014.
In April and onward, downturn in demand and sales is anticipated after the robust sales before the tax increase. In FY 1997, when the consumption tax was raised last time in April, sales volume plunged by 13.9% y/y to 6.28 million units. This sharp drop can also be attributed to other unfavorable economic conditions in July and later, such as the Asian currency crisis that began in July and the voluntary closure of Yamaichi Securities in November, 1997.
Regarding FY 2014 sales in Japan, outlooks differ among organizations. The Japan Automobile Manufacturers Association, Inc. (JAMA) forecasts that vehicle sales in Japan will decrease by 16.6% y/y to 4.75 million units in FY 2014 (announced on March 20, 2014). This reflects JAMA's pessimistic view with a decrease larger than 13.9% experienced in FY 1997, when the economy stagnated. Major automakers and think tanks are suggesting brighter prospects between 5.1 million units and 5.3 million units (y/y decrease between 10.4% and 6.9%) based on current economic and sales situations.
Japanese economic conditions are different between FY 2014 and FY 1997, when Japan was hit by the Asian currency crisis. Accordingly, FY 2014 sales volume is unlikely to decline to the same degree as in FY 1997 (13.9%). As forecasted by Honda and Nissan, sales over 5 million units, down 10% y/y, seem to be a reasonable outlook for FY 2014.
A U.K research firm, LMC Automotive, estimates that sales of light vehicles will decrease slightly to 5.22 million units in calendar year (CY) 2014. Its outlook for CY 2015 suggests a 11.7% decrease y/y to 4.61 million units, due to downturn between January and March after the last-minute demand.
(Source) Statistic of Japan Automobile Manufacturers Association (JAMA) [Updated on May 1, 2014]
Outlook of Japanese market in 2014 (Japanese market analysis part 1) (Jan. 2014)
2013 Sales by model & engine displacement (Japanese market analysis part 2) (Jan. 2014)
FY 2014 sales outlooks of various organizations
In Japan, the consumption tax was first introduced at a rate of 3% in April 1989. At that time, Japan enjoyed so-called bubble economy and the excise duty on vehicles was abolished concurrently with the consumption tax introduction. Under these circumstances, the FY 1989 vehicle sales volume increased by 10.4% y/y to 7.45 million units. In April 1997, the tax rate was raised from 3% to 5%. Following downturn after last-minute demand, economic conditions worsened in July, partly due to the Asian currency crisis. As a result, the FY 1997 vehicle sales volume ended with a decrease of 13.9% to 6.28 million units.
Regarding sales volume in Japan in FY 2014, when the consumption tax was raised to 8%, estimates by each organization vary between 4.75 million units (down 16.6% y/y) and 5.3 million units (down 6.9% y/y), as shown in the table below. Because of the following reasons, however, the sales are unlikely to decrease as much as by 13.9% as in FY 1997. The FY 2014 sales volume is expected to top the 5.1 million unit level, down 10% y/y, as estimated by Honda and Nissan.
1. As of February 2014, the jobs-to-applicants ratio is 1.05. This ratio over 1 reflects better economic conditions than in FY 1997, when it was 0.7. 2. The vehicle acquisition tax has been reduced, which compensates for the consumption tax hike to a certain level. (Please click here for the details.) 3. Decrease in sales in April 2014 is likely to be limited to 10% y/y, partly due to order backlogs for the rush demand before the tax hike (unlike a 15.1% decrease in April 1997). 4. A tax hike has been decided for mini vehicles to be newly acquired on April 1, 2015 and later. This will probably generate last-minute demand and following downturn for mini vehicles before and after April 2015.
The consumption tax is scheduled to be raised further to 10% in October 2015. At the same time, however, the vehicle acquisition tax will be abolished, which is expected to suppress both last-minute demand and following downturn.
Vehicle sales volume and consumption tax
|FY 1989||FY 1997||FY 2014|
|Consumption tax||Introduced at a rate of 3%||Raised from 3% to 5%||Raised from 5% to 8%|
|Vehicle sales volume (in thousands unit: y/y increase/decrease)||7,450 (+ 10.4%)||6,280 (- 13.9%)||Estimate of each organization (see table below): 4750 (- 16.6%) - 5300 (- 6.9%)|
|Automobile-related tax reduction||Excise duty was abolished: Formerly 18.5% for midsize/large cars (*note)||n.a.||Acquisition tax was reduced for private non-mini vehicles from 5% to 3% (Please click here for the details.)|
|Economic conditions (jobs-to-applicants ratio)||Mar. 1989||Mar. 1990||Mar. 1997||Mar. 1998||Feb. 2014|
|1.17||1.36||0.74||0.57||1.05 (+ 0.01 y/y)|
Note: Provisional measures were taken simultaneously to impose a consumption tax of 6% on midsize/large cars between April 1989 and March 1992 and 4.5% between April 1992 and March 1994.
FY 2014 sales outlook in Japan
|FY 2014 outlook (in thousands unit)||Remarks||Release date|
|Automotive industry analyst Mr. Nakanishi Takeki||Vehicle total:5,100- 5,300 (between -10.4% and -6.9% y/y)||(Seasonally adjusted annualized rate)Apr. to June: 4.6 million units, July to Sep.: 5 million units, Oct. to Mar.: more than 5.2 million unitsTo be supported by reduced vehicle-related taxes, enhanced eco-car subsidy program, and increased wages.||April 21, 2014 (Reported)|
|Honda||Vehicle total:5100-5,200 (between -10.4% and -8.6% y/y)||The consumption tax hike will not significantly affect domestic unit sales in 2014. It also anticipates a last-minute demand before the mini-vehicle tax hike.||April 25, 2014 (Reported)|
|Dai-ichi Life Research Institute||Passenger car total:4,400 (-9.3% y/y)||Revised downward from the FY 2014 outlook of 4.46 million units as of January 2014. As the rush demand was larger than the tax hike in FY 1997, the downturn after April will also be larger. In FY 2014, however, some improvements are expected in wages and employment. This will suppress a decrease in sales, unlike 13.6% in FY 1997. A moderate recovery after the downturn is expected.||March 3,2014|
|Nissan||Vehicle total: 5,100 (-10.4% y/y)||-||April 17, 2014 (Reported)|
|(Same rate of decline in FY1997)||Vehicle total: 4,890 (-13.9% y/y)||Estimate on the assumption that the y/y decrease/increase in FY 2014 will be the same as in FY 1997, when the previous consumption tax hike was implemented. (Please see the graph above).||-|
|JAMA||Vehicle total: 4,750(-15.6% y/y) Passenger car total:4,030 (-16.3% y/y) Mini vehicle total (passenger and commercial vehicles): 1,810 (-18.8% y/y)||In FY 2014, the Japanese economy will be supported by increased exports, improved corporate earnings, and government economic packages. Meanwhile, some decline is anticipated in consumer confidence after the consumption tax hike. Downturn is also expected after the last-minute demand in the second half of FY 2013.||March 20,2014|
|Daihatsu||Mini vehicle total: 1,800-1,900 (-16 to -20% y/y)||Mini vehicle unit sales in Japan for FY 2015 will be at 1.7 million unit level, due to the mini-vehicle tax hike as well as further consumption tax hike to 10%||April 24, 2014|
FY 2014 sales plans of Japanese automakers
For FY 2014, many automakers have set their sales targets at 4% to 6% lower than the previous year. Exceptionally, Honda plans a y/y increase of 21% to sell 1.030,000 units, with consecutive releases of new models in summer and onward. Mitsubishi Motors also intends to increase its sales by 3% to 147,000 units.
|OEMs||FY 2014 outlook (in thousands unit: YoY)||FY 2014 result (in thousands unit)||Description||Release date|
|Toyota/Lexus||1,450 (-12.0%) Retail sales||1,648||-||May 8, 2014|
|Honda||1,030 (+21%) Retail sales||848||Apr. to Sept. 2014: 460,000 units (down 6% y/y) Oct. 2014 to Mar. 2015: 570,000 units (down 5% y/y) In and after the summer of 2014, Honda intends to expand its sales by launching Fit-based sedan, Stream's successor, new Legend, N-BOX-derived model, new Step Wagon, and new Fit Shuttle.(Please refer to this report for the details.)||April 25, 2014|
|Suzuki||675 (-7.3%) Retail sales||728||-||May 9, 2014|
|Nissan||640 (-11%) Retail sales||719||Nissan announced that it will increase its market share in Japan to mid-13% in FY 2014 (from 12.6% in FY 2013). The outlook based on a news on April 17, 2014, was 690,000 units (-4%).||May 12, 2014|
|Daihatsu||663 (-5.5%) Retail sales||701||Non-mini vehicles (FY 2013: 3,000 units -> FY 2014: 3,000 units) Mini vehicles (FY 2013: 699,000 units -> FY 2014: 660,000 units) In FY 2014, Daihatsu aims to increase its market share by releasing six new models, including completely new ones.||April 24, 2014|
|Mazda||230(- 6%) Retail sales||244||Apr. to Sept. 2014: 104,000 units (down 6% y/y) Oct. 2014 to Mar. 2015: 126,000 units (down 5% y/y)||April 25, 2014|
|FHI (Subaru)||195 (+7.3%) Whole sales||182 Whole sales||-||May 9, 2014|
|Mitsubishi||147 (+3%) Retail sales||143||Non-mini vehicles (FY 2013: 52,000 units -> FY 2014: 54,000 units) Mini vehicles (FY 2013: 91,000 units -> FY 2014: 93,000 units) Expects strong sales of the eK Series (FY 2013: 55,000 units -> FY 2014: 78,000 units)||April 24, 2014|
|Isuzu||74(+7.7%) Retail sales||68||-||May 12, 2014|
|Hino||49.5 (-5.2%) Retail sales||52.2||-||April 25, 2014|
|Total||5,154 (-3.4%)||5,333||-||As of May 12, 2014|
Source: Press releases of each automaker Note: The above table will be updated with information for automakers that will announce their FY 2013 financial results in May 2014 as it becomes available.
FY 2013 unit sales mark 5.69 million units, highest level since FY 2006
In FY 2013, vehicles sales in Japan (passenger and commercial vehicles) increased for three consecutive years by 9.2% y/y to 5.69 million units. This is the highest level since FY 2006, which posted sales of 5.62 million units.
Out of the total, mini vehicles sold 2.26 million units, up 14.7% y/y. The volume greatly exceeded the previous record, 2.03 million units, set in FY 2006. In terms of the sales percentage, mini vehicles accounted for 39.7%, up 1.8 percentage points y/y. Models equipped with functions equivalent to a small car have sold well, including the Honda N Series and the Daihatsu Move. Strong sales have also been reported for the Dayz/eK Wagon which were jointly developed by Nissan and Mitsubishi.
Japanese unit sales by vehicle type
|(in thousands unit)|
|FY2006||FY2007||FY2008||FY2009||FY2010||FY2011||FY2012||FY2013||FY 2014 JAMA Outlook|
|Ratio of Mini =(A+B)/C||36.1%||35.6%||38.5%||34.8%||35.4%||35.5%||37.9%||39.7%||38.1%|
Source: Japan Automobile Manufacturers Association
Sales volume and market share by brand: Honda increases share with Fit and N Series
In FY 2013, Honda increased its market share remarkably from 13.8% in the previous year to 14.9%, with strong sales of the third-generation Fit and the N Series (N-BOX, N-WGN, and N-ONE). On a sales volume basis, the company sold 848,000 units, up 18.4% y/y. In comparison with FY 2011, two years ago, the volume posted an increase of 150,000 units. Honda has risen to the second place out of its three long-term competitors, Nissan, Suzuki, and Daihatsu, all with shares around 13%.
The market leader, Toyota & Lexus, increased its sales volume by 2.3% y/y to 1.64 million units. Although sales of the Prius and Aqua dropped by 10% y/y, the decrease was compensated by increased sales of the Corolla and Crown. Its market share, however, declined by 2.0 percentage points to 28.9%. The share of "Others", mostly consisting of imported non-mini vehicles, increased by 0.6 percentage points y/y to 5.3%. On a volume basis, this segment increased by 23.0% y/y to 302,000 units.
Sales volume and share by group in the Japanese market
|Source: Japan Automotive Manufacturers Association (JAMA)|
|Note 1.||Includes vehicles manufactured overseas|
|2.||Most of "others" are imported vehicles.|
Sales volume by model: Aqua, Prius, and N-BOX keep top positions
Regarding FY 2013 sales volume by model, the Toyota Aqua maintained its first place with sales of 260,000 units, and the Prius the second with 252,000 unit sales. Their volumes, however, decreased by 8.1% (Aqua) and 10.3% (Prius) y/y, respectively. The Honda N-BOX also held on to third position, with a 4.4% decrease to 226,000 units. The fourth place was taken by the fully redesigned Honda Fit (up 27.6% y/y to 217,000 units).
The partially-redesigned Daihatsu Move and fully-redesignedTanto both increased sales to rank in the fifth and sixth.
Nissan's new mini vehicles, the Dayz, sold 140,000 units and ended in ninth place. The volume, however, includes two models: Dayz height wagon and Dayz Roox super-height wagon.
Top 20 best selling models in Japan
|Model name||Make||Sales volume||Model name||Make||Sales volume||Model name||Make||Sales volume|
Source: Japan Automobile Dealers Association and Japan Mini Vehicles Association Notes: Models with asterisk (*) are minicars
Sales Forecast by LMC Automotive: Japanese sales to decrease to 5.22 million units in CY 2014
|(LMC Automotive, Quarter1 2014)|
Supported by the positive impact of 'Abenomics', light vehicle sales [in Japan] in 2013 were favorable, and then finished with 5.26 million units, slightly down 0.3% from the previous year.
The last minute demand before the consumption tax hike (raised from 5% to 8% in April 2014) continued until March 2014, significantly increasing the light vehicle sales for the first three months in 2014 by 22.1% to 1.815 million units compared to the previous year. However, a slump in sales after this prebuy is inevitable.
For the 2014 market outlook, LMC Automotive states: "We initially anticipated a strong bounce back after the tax hike, and forecast 2014 sales at under 5 million units. However, the recent pre-buying trend is stronger than anticipated, even after the tax hike, and the Japanese government plans several stimulus plans to minimize the negative impact of the tax hike. Thus we have raised our 2014 sales forecast by 355k units, to 5.22 million units". In 2015, total vehicle sales is expected to decrease sharply to 4.61 million units, 11.7% down compared to 2014 level.
As for the medium- and long-term outlook, an ageing population and high vehicle density are constraints for sales growth in the long term. According to the global automotive research company's forecast, Japanese light vehicle sales in 2017 will decrease to 4.40 million units, down 16.2% from 2013. The company comments: Sales are anticipated to drop in most of the sales groups. However, sales of the Honda group will slightly increase toward 2017. In 2013, the group started launching a wider variety of models, which are expected to boost Honda sales in Japan. Although we forecast sales of Toyota group to decrease, its position as the leading maker of Hybrid vehicles is still strong. We expect the group to increase its sales share [in 2017]"
Japanese light vehicle sales forecast by make
|Fiat Chrysler Automobiles||14,238||17,917||18,896||16,387||14,324||13,184||15,886|
|General Motors Group||3,499||3,086||4,061||3,704||2,996||2,898||3,224|
|MG Rover Group||53||56||56||0||0||0||0|
|Others by Country||66||9,380||10,235||9,885||9,418||9,102||8,688|
|Source: LMC Automotive "Global Automotive Sales Forecast (Q1 2014)|
|(Note) 1.||Data indicate figures of only small-size vehicles, including passenger cars and light commercial vehicles with a gross vehicle weight of under 6 tons.|
|2.||All rights reserved. Reproduction of any data will require permission of LMC Automotive.|
|3.||For more detailed information or inquiries of forecast data, please contact LMC Automotive.|
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