JAPAN AUTOMOTIVE

White Paper 2024

John Paul Dumas II

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 Introduction
The Japanese automotive market is one of the largest and most advanced
markets globally, with significant impacts on the global automotive industry. This
white paper provides a comprehensive analysis of the market, focusing on
electric vehicles (EVs), oil-based cars, used cars, government policies, pricing,
major brands, hurdles, infrastructure, and growth opportunities.

Electric Vehicles (EVs)

Electric vehicles are gaining significant traction in Japan due to their eco-friendly nature and lower
operating costs. The Japanese government has set ambitious targets for EV adoption, aiming to have
100% of all new vehicle sales be electric by 2050. Key factors driving the growth of EVs in Japan include:

● Government incentives: The government has introduced various incentives to promote EV

adoption, including tax credits, grants, and subsidies for the development of EV infrastructure.
● Increasing consumer awareness: Rising concerns about air pollution and climate change are
leading to greater consumer interest in eco-friendly transportation options.
● Technological advancements: Improvements in battery technology have led to longer driving
ranges and shorter charging times, making EVs more practical for daily use.

Despite these positive factors, the growth of EVs in Japan faces several challenges, including:

● Limited charging infrastructure: The lack of a comprehensive charging network hinders the
widespread adoption of EVs.
● High upfront costs: Despite government incentives, EVs remain more expensive than their
oil-based counterparts, limiting their affordability for many consumers.
● Limited product offerings: The range of available EV models is still relatively narrow, restricting
consumer choice.

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 Oil-Based Cars
Although the market share of oil-based cars is
expected to decline in the coming years, they will
continue to dominate the Japanese automotive
landscape for the foreseeable future. Key factors
driving the demand for oil-based cars in Japan
include:

● Affordability: Oil-based cars generally offer a

more affordable entry point for consumers
compared to EVs. Although the
● Greater product variety: The range of market share of
available oil-based car models is oil-based cars is
significantly broader than that of EVs, expected to decline
offering consumers more choice. in the coming
● Established infrastructure: The
years, they will
well-developed network of petrol stations
and automotive service centres makes
continue to
oil-based cars more convenient for daily
dominate the
use. Japanese
automotive
landscape for the
foreseeable future

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 Used Cars Government
Policies
The used car market in Japan is growing The Japanese government plays a crucial
rapidly, driven by increasing car ownership role in shaping the automotive market
rates and the affordability of pre-owned through various policies and regulations,
vehicles. Key factors driving the growth of including:
the used car market in Japan include:
● Promotion of EV adoption: The
● Affordability: Used cars offer a more government has set ambitious
affordable entry point for
targets for EV adoption and is
offering various incentives to
consumers compared to new
encourage this transition.
vehicles, both oil-based and
● Emphasis on fuel efficiency: The
electric.
government has introduced fuel
● Increasing car ownership rates: As efficiency standards for new
more Japanese citizens enter the vehicles in an effort to reduce
middle class, demand for affordable emissions and promote the
personal transportation options is adoption of more eco-friendly
expected to rise. transportation options.
● Informal market: The presence of a ● Tax incentives: The government
large informal used car market in offers tax credits and other
Japan provides consumers with a incentives for the purchase of
wide range of options and electric vehicles, making them
competitive pricing. more affordable for consumers.
●

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 Pricing

Pricing is a critical factor in the Japanese automotive market, with affordability being a key
determinant of consumer demand. Key factors influencing pricing in the Japanese automotive
market include:

● Import tariffs: High import tariffs on new vehicles make locally assembled vehicles more
competitive in terms of pricing.
● Competition: Intense competition among automotive manufacturers and dealerships drives
down prices, particularly in the used car market.
● Financing options: The availability of financing options, such as low-interest loans and
leasing programs, can make vehicle purchases more affordable for consumers.

Pricing is a critical factor in the Japanese automotive market,

with affordability being a key determinant of consumer
demand. Key factors influencing pricing in the Japanese
automotive market include:

Major Brands
The Japanese automotive market is dominated by several major brands, including Toyota, Honda,
Nissan, Mitsubishi, and Subaru. These brands have established strong market positions through
competitive pricing, diverse product offerings, and strong brand recognition. Key factors driving
the success of these brands in Japan include:

● Affordable pricing: These brands offer a wide range of affordable vehicles, catering to the
budget-conscious Japanese consumer.
● Diverse product offerings: The availability of a wide range of vehicle types, from small cars
to SUVs, allows these brands to cater to a diverse consumer base.
● Strong brand recognition: These brands have built strong brand recognition in Japan,
which translates into consumer trust and loyalty.

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 Hurdles

The Japanese automotive market faces several hurdles that could hinder its growth,
including:

● Limited infrastructure: The lack of a comprehensive road network and limited

public transportation options make personal vehicle ownership essential for
many Japanese citizens, driving demand for affordable vehicles.
● Economic uncertainties: The Japanese economy is subject to fluctuations in oil
prices and other global economic factors, which can impact consumer
purchasing power and demand for vehicles.
● Intense competition: The presence of numerous automotive manufacturers and
dealerships in Japan creates a highly competitive market, which can drive down
profit margins and make it difficult for new players to enter the market.

Economic uncertainties: The Japanese economy is subject to

fluctuations in oil prices and other global economic factors,
which can impact consumer purchasing power and demand for
vehicles

Infrastructure
The development of a robust automotive infrastructure is essential for the growth of the Japanese
automotive market. Key components of this infrastructure include:

● Road infrastructure: The expansion and improvement of the road network in Japan will be
crucial for the growth of the automotive market, particularly in rural areas.
● Public transportation: The development of efficient and affordable public transportation
options will help to reduce congestion and improve overall mobility in Japan.
● EV charging infrastructure: The establishment of a comprehensive network of EV charging
stations is essential for the widespread adoption of electric vehicles in Japan.

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 Growth Opportunities
Despite the challenges, the Japanese automotive
market presents several growth opportunities for
industry players, including:

● Electric vehicle market: The growing

demand for eco-friendly transportation
options and government incentives for EV
adoption create significant growth potential
for the EV market in Japan.
● Affordable vehicle segments: The increasing Despite the
demand for affordable personal
transportation options presents
challenges, the
opportunities for automotive manufacturers Japanese
and dealerships to expand their offerings in automotive
this segment.
market presents
● Automotive aftermarket: The growing
number of vehicles on Japanese roads several growth
creates opportunities for businesses opportunities for
specializing in automotive parts, industry players,
maintenance, and repair services.
including:

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 Conclusion

The Japanese automotive market is poised for significant growth in

the coming years, driven by changing consumer preferences,
advancements in technology, and government policies promoting
sustainable mobility. Key factors driving this growth include the
increasing demand for electric vehicles, the affordability of used
cars, and the presence of major automotive brands offering a wide
range of affordable vehicles. However, the market faces several
challenges, including limited infrastructure, economic uncertainties,
and intense competition. Opportunities for growth lie in the EV
market, affordable vehicle segments, and the automotive
aftermarket, making the Japanese automotive market an attractive
prospect for industry players.

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 Key statistics
1. Electric Vehicles (EVs) 5. Pricing
● According to the Japan Automobile ● According to JADA, the average price of a
Dealers Association (JADA), electric new car in Japan in 2020 was 2.9 million
vehicle sales in Japan reached yen ($27,000), up from 2.8 million yen in
138,000 units in 2020, accounting the previous year.
for 1.3% of total new vehicle sales. ● The average price of a used car in Japan
● The Japanese government aims to in 2020 was 1.3 million yen ($12,000), up
have 100% of all new vehicle sales from 1.2 million yen in the previous year.
be electric by 2050. 6. Major Brands
● In 2020, the Ministry of Economy, ● Toyota is the largest automotive
Trade, and Industry (METI) manufacturer in Japan, with a market
announced a plan to invest 2 trillion Despite the
share of 28.8% in 2020.
yen ($19 billion) in the development ● Honda is the second-largest automotive
of EV infrastructure and challenges, the
manufacturer in Japan, with a market
technologies.
2. Oil-Based Cars 7. Hurdles
Japanese
share of 16.6% in 2020.

● According to JADA, oil-based car ● automotive

According to the Japan Times, there are
sales in Japan reached 5.1 million only 20,000 public EV charging stations in
units in 2020, accounting for 98.7% market presents
Japan, compared to 31,000 petrol stations.
of total new vehicle sales. According to the Organisation for
● The average fuel efficiency of new
●
several growth
Economic Co-operation and Development
cars sold in Japan in 2019 was 20.1
km/L, up from 17.5 km/L in 2010.
opportunities for
(OECD), Japan's public transportation
system accounts for only 27% of all
3. Used Cars industry players,
passenger transport, compared to the
● According to JADA, used car sales OECD average of 43%.
in Japan reached 5.7 million units in 8. Infrastructure
including:
2020, up 3.5% from the previous ● According to the Japan Automotive
year. Research Institute (JARI), there are 1.1
● The average price of a used car in million km of roads in Japan, with 99% of
Japan in 2020 was 1.3 million yen them paved.
($12,000), up from 1.2 million yen in ● According to JARI, there are 50,000 petrol
the previous year. stations in Japan, with 99% of them
4. Government Policies offering regular unleaded petrol and 85%
● The Japanese government offers offering premium unleaded petrol.
tax incentives of up to 400,000 yen 9. Growth Opportunities
($3,800) for the purchase of electric ● According to the International Energy
vehicles. Agency (IEA), the global EV market is
● The government has set fuel expected to grow at a compound annual
efficiency standards for new growth rate (CAGR) of 29% between 2020
vehicles, with the target of and 2030.
achieving an average fuel efficiency ● According to JADA, the used car market in
of 25 km/L by 2030. Japan is expected to continue growing,
with sales projected to reach 6 million
units by 2025.

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