Japanese new vehicle sales rise 5.4% y/y in April, 11% y/y in YTD

02 May 2017 IHS Markit Automotive Expert

Sales of mainstream vehicles in Japan recorded their ninth consecutive month of growth during April, while minivehicle sales recovered on strong demand for new models.

IHS Markit perspective

  • Significance: Japanese sales of new vehicles, excluding minivehicles, totalled 224,220 units during April, marking a 5.4% year-on-year (y/y) increase. Minivehicle sales surged 16.5% y/y to 130,530 units.
  • Implications: Japanese sales of mainstream registered vehicles grew for a ninth straight month in April, whereas minivehicle sales posted growth for the first time in four months.
  • Outlook: IHS Markit currently forecasts that light-vehicle sales in Japan will total more than 4.98 million units during 2017, up 2.8% y/y. The growth is expected to come from a gradual recovery in minivehicle sales and the continuation of "eco-car" tax benefits for another two years.

According to data released by the Japan Automobile Dealers' Association (JADA), sales of new vehicles, excluding minivehicles, recorded 5.4% year-on-year (y/y) growth to 224,220 units during April. Of this total, sales of passenger and compact cars grew 6.1% y/y to 195,874 units, truck sales edged up 0.5% y/y to 27,211 units, while bus sales were up 6.9% y/y to 1,135 units. Sales in the year to date (YTD) period stood at over 1.254 million units, up 11% y/y.

Within the mainstream vehicle market, Toyota reported a sales increase of 1.4% y/y during April, to 109,837 units. It was followed by Honda, which sold 27,452 units, up 14.3% y/y. Nissan took third spot with a 21.7% y/y surge in sales to 24,384 units, followed by Subaru with 9,495 units (up 20.4% y/y) and Suzuki with 9,079 units (up 8% y/y). Mazda came sixth with sales of 8,977 units, a 4.9% y/y drop. Seventh and eighth positions were occupied by Isuzu and Hino with sales of 4,537 units (up 8.4% y/y) and 3,150 units (down 14.4% y/y), respectively. These were followed by Lexus and Mitsubishi with sales of 3,050 units (down 32.4% y/y) and 2,028 units (down 3.9% y/y), respectively. Meanwhile, 19,151 vehicles were imported into Japan in April, up 1.3% y/y.

Industry sales of minivehicles, categorised as vehicles with an engine capacity of up to 660 cc, grew 16.5% y/y to 130,530 units in April, according to the Japan Mini Vehicles Association. The segment recovered again after posting 1.7% y/y growth December. The brief rise in December came after 23 consecutive months of decline as the segment suffered from the impact of a 50% increase in minivehicle ownership tax introduced in April 2015 and a consumption tax increase in April 2014. YTD sales of minivehicles grew 2% y/y to 677,505 units.

During the month, Daihatsu became the leading player in the segment by posting sales of 44,478 units, up 20.1% y/y. Daihatsu was closely followed by Suzuki, with sales of 42,243 units, up 6.1% y/y. In third place, Honda's sales reached 21,070 units, down 1.1% y/y. Nissan occupied fourth position, its sales surging 121.2% y/y to 12,330 units, followed by Mazda with 3,025 units (up 10.6% y/y). Mitsubishi and Toyota were next with 2,784 units (up 88.5% y/y) and 2,370 units (up 28.5% y/y), respectively. The last on the list was Subaru, which sold 2,226 units during the month, declining 1.1% y/y.

Outlook and implications

April was the ninth consecutive month of increase for new-vehicle sales in Japan. The market has recorded double-digit sales growth in recent months, mainly on a rush in demand ahead of the tightening of fuel-economy standards from April 2017. In a bid to promote and support eco-car sales, the Japanese government has extended the current "eco-car" tax benefits for another two years from April 2017 to April 2019 but also raised the threshold for benefiting from the scheme. Sales surged 13.8% y/y in March and 13.4% y/y in February. Other key factors contributing to the growth during the month were positive demand for new models such as the Toyota C-HR, Nissan Serena and Note, and Suzuki Swift.

During April, the minivehicle segment returned to positive territory, helped by new model launches such as Toyota's Roomy and Tank, according to Yoshiaki Kawano, a Tokyo-based senior analyst from IHS Markit. The segment is recovering from the negative effect from a 50% increase in minivehicle-ownership tax introduced in April 2015, followed by mileage scandal involving Mitsubishi in March 2016. The automaker suspended production and sales of four of its minivehicles, sold only in Japan, after the models were found to have inflated mileage ratings. In August 2016, the automaker was found to have overstated fuel-consumption data for eight more models including the Pajero, Outlander, and RVR. Sales of models affected by the first mileage-data scandal resumed on 1 July 2016, while sales of models involved in the second revelation restarted on 1 October 2016 with corrected mileage data. As a result, Mitsubishi's sales witnessed double-digit percentage declines during most of 2016.

IHS Markit currently forecasts that light-vehicle sales in Japan will total more than 4.98 million units during 2017, up 2.8% y/y. Of this total, passenger-car sales, which account for nearly 85% of the overall market, are expected to grow by 3.7% y/y to 4.25 million units. Sales of light commercial vehicles (LCVs) are expected to fall 1.8% y/y to 733,958 units.


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