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Customer LoginsJapanese C-segment car sales surge on back of new Prius, A- and B-car categories post YTD double-digit declines
Dampening effects from tax rises in 2014 and 2015, coupled with macro-economic factors, have limited the momentum of A- and B-segment vehicles in Japan, while models such as the Prius have pushed up sales in the C-car segment.
IHS Automotive Perspective
- Significance: A-segment cars continued to lose market share in Japan's light-vehicle market during the first five months of 2016, while the C-car segment was the biggest gainer.
- Implications: Thanks to encouraging demand for the new Prius, the C-car segment relegated the B-car segment into third place in the sales chart for the period.
- Outlook: The further postponement of the consumption tax increase to 2019 has led to a downgrading of IHS Automotive's 2016 market forecast as total light-vehicle sales in Japan during the first five months reached more than 2.08 million units, a decline of 5.0% y/y.
A-segment cars continued to take the lion's share of Japan's total light-vehicle market during the first five months of 2016, according to IHS Automotive data. A total of 615,363 vehicles belonging to this segment were sold in the timeframe, although this was down 14.8% year on year (y/y). The segment's market share stood at 29.5% in January-May, down by 3.5 percentage points compared with the corresponding period of 2015, making it the top market-share loser in the light-vehicle market during the period.
Meanwhile, sales in the second best-selling category, the C-car segment, grew by 16.0% y/y during the period to 310,517 units. This segment's market share during the period was 14.9%, up 2.7 percentage points from 12.2% during the same period of 2015. This growth can mainly be attributed to models such as the new Prius, launched in Japan in December 2015. Of the total sales in the segment during the first five months, Toyota's Prius accounted for 113,777 units, reflecting growth of 88.1% y/y for the model. The fourth-generation Prius is the first model to incorporate the new modular Toyota New Global Architecture (TNGA), an integrated development programme for powertrain components and vehicle platforms. According to IHS Automotive data, the model is expected to register total Japanese sales of 199,435 units in 2016.
The third best-selling segment by volume, the B-car segment, recorded a 15.5% y/y decline during the five-month period to 250,509 units. This segment accounted for a market share of 12.0%, down by 1.5 percentage points y/y. Toyota's Aqua led the segment with sales of 74,368 units, followed by the Honda Fit (48,736 units), Toyota Vitz (30,252 units), Mazda Demio (27,579 units), and Toyota Passo (22,273 units). Of these, only the Passo recorded a sales gain, of 7.6% y/y, and this failed to offset declines for other key models. Toyota debuted a new-generation Passo in Japan during April. The new-generation model has been developed by Toyota's minivehicle arm, Daihatsu, and is manufactured at the company's Ikeda plant in Japan. According to IHS Automotive light-vehicle production data, with the latest update the Passo moves to a new D91B(2) platform from the D71A platform, which will end production in 2016. The D91B(2) platform will replace the current D91B platform to challenge Daihatsu's biggest competitor, Suzuki.
In the next three spots, sales in the D-multi-purpose vehicle (MPV), A-Van and B-MPV categories reached 194,733 units (down 5.7% y/y), 159,988 (down 0.6% y/y), and 135,455 units (up 23.7% y/y), respectively, during January-May. These three segments together accounted for 23.4% of total light-vehicle sales in Japan during the first five months of 2016. In the D-MPV segment, models such as the Toyota Voxy, Nissan Serena, and Honda Step Wagon helped to keep up sales volumes, while the Toyota Sienta helped to push up volumes in the B-MPV segment. The Sienta was followed by the Nissan Note and Honda Freed, both of which posted sales declines during the period.
Outlook and implications
A-segment cars - which include minivehicles (also known as Kei cars in Japan), which benefit from preferential tax treatment - remain the largest segment in Japan, a longstanding trend in the market. However, the segment is also losing market share the fastest. This segment faced a dampener in the form of a 50% rise in minivehicle ownership tax in April 2015. This move led to a slowdown in minivehicle sales during the year. Additionally, a consumption tax rise in April 2014 from 5% to 8% and macroeconomic factors such as higher inflation and weak wage growth have reduced the momentum of consumer spending in the country. In addition, within the minivehicle segment, Mitsubishi and Nissan's offerings have been hit by a fuel-economy scandal that began in late April. Mitsubishi suspended production and sales of four types of minivehicle in Japan after it publicly admitted that its fuel-economy testing regime under Japanese regulatory requirements had underestimated the "coast down" and rolling resistance effects for certain models. The manipulated tests involved four popular minivehicle models: the eK Wagon and eK Space manufactured and sold by Mitsubishi, and the Dayz and Dayz Roox supplied by Mitsubishi to Nissan under an original equipment manufacturer (OEM) agreement since June 2013. Suzuki also last month admitted that it had used non-compliant fuel-efficiency tests for its vehicles, some of which were A-segment models. However, Suzuki has denied any wrongdoing and insists that the stated fuel-economy figures for its vehicles are accurate, and it continues to sell its vehicles in the country.
Last month, Japanese prime minister Shinzo Abe again postponed the planned further increase in consumption tax from the current 8% to 10% until October 2019, from an originally scheduled October 2015. As part of the government's plan to reform the taxation system, consumption tax was increased from 5% to 8% in April 2014, the first increase in 17 years. This had an adverse impact on the automotive industry as vehicle sales during 2015 declined by 9.4% year on year (y/y) to around 5.1 million vehicles, according to IHS Automotive data. This decline can also be attributed to a 50% increase in minivehicle ownership tax introduced by the government in 2015. Although the delay in the latest tax increase is intended to help consumption and revive the overall economy, it may cause the softness in vehicle sales to persist for longer. IHS Automotive had previously forecast a moderate increase of 0.2% in Japanese light-vehicle sales to 4.95 million units in 2016 as a result of pre-emptive buying ahead of the tax increase. With the consumption tax rate now set to remain unchanged through to October 2019, the expected uptick in demand before April 2017 will now not take place. Accordingly, IHS Automotive has this month pared its sales forecast for 2016, and we now expect a decline of 3.1% to 4.08 million vehicles.
About this article
The above article is from IHS Automotive Same-Day Analysis of automotive news, events and trends, and is a deliverable of the World Markets Automotive Service. The service averages thirty stories per day and also provides competitor and country intelligence. Get a free trial.