Customer Logins
Obtain the data you need to make the most informed decisions by accessing our extensive portfolio of information, analytics, and expertise. Sign in to the product or service center of your choice.
Customer LoginsSmall SUVs gain in popularity in Japan during H1
In line with changing consumer preferences, all the top automakers in Japan are vying to grab a slice of the sport utility vehicle (SUV) market, particularly small SUVs.
IHS Automotive perspective
- Significance: In the first half (H1) of 2016, consumers began to prefer A and B-segment SUVs more over regular C-SUVs as combined market share of the two segments rose to 29.9% of the total SUV sales (up from 23.3% in the previous year) and 23.7% (up from 23%), respectively. The share of the C-SUV was 27.2% in H1 of 2016, down from 31.6% in the corresponding period of last year. SUVs of all segments are forecast to make up 12% of the total light vehicle market in 2016.
- Implications: According to Yoshiaki Kawano, a Tokyo-based senior analyst with his Markit, models such as Daihatsu's Cast (introduced in September 2015 in the Japanese market) helped push up sales volume of the A-SUV segment. Meanwhile, Suzuki's Ignis (launched in February 2016) helped the B-SUV segment to gain momentum. During the six-month period, the Cast sold 39,908 units while the Ignis sold 13,036 units.
- Outlook: According to IHS Automotive light-vehicle forecasts, small SUVs will remain a popular choice among consumers and will take a market share of 57% of the total SUV share in full-2016 from 46% in 2015. On the other hand, sales of C-SUVs will continue to lose steam and will account for a 25% market share in 2016, down from 30.3% in the previous year. IHS Automotive forecasts a 4% year-on-year (y/y) decline in Japanese light-vehicle vehicle sales (including mini-vehicles) during 2016 to nearly 4.75 million units. The SUV segment, however, will remain in positive territory, growing marginally by 0.3% y/y to 568,380 units.
By the end of 2015, Japan's sport utility vehicle (SUV) segment accounted for 11.6% of total new light-vehicle sales in the country. The segment began to gain particular momentum during 2014, when its share nearly doubled from 5.4% in 2013 to 10.1% in 2014, according to IHS Automotive light-vehicle data. The Japanese vehicle market, already suffering from the impact of a consumption tax hike in 2014, took another hit in the form of a 50% hike in mini-vehicle ownership tax in 2015. As a result, sales of the traditionally key-selling segments, including passenger cars and multipurpose vehicle (MPVs), declined with customers shifting towards other segments such as SUVs in 2015.
Within the SUV segment in Japan, small sub-segments such as A-SUV and B-SUV, as well as C-SUV, fare very well, as they do in other global markets because of their low price points and the range of model offerings. The relatively compact size of vehicles in these segments is attractive for those living in places with crowded cities, such as Japan and Europe. During 2015, the C-SUV segment took the lion's share of SUV sales, with 30.3%, followed by the A-SUV segment with 25.7% and the B-SUV category with 20.9%. However, in the first half (H1) of 2016, consumers began to prefer A and B-segment SUVs more over regular C-SUVs as market share of the two segments rose to 29.9% (up from 23.3% in the previous year) and 23.7% (up from 23%), respectively. Share of the C-SUV was 27.2% in H1 of 2016, down from 31.6% in the corresponding period of last year. According to Yoshiaki Kawano, a Tokyo-based senior analyst with his Markit, models such as Daihatsu's Cast (introduced in September 2015 in the Japanese market) helped push up sales volume of the A-SUV segment, where Suzuki's Hustler lead the sales volume. Meanwhile, Suzuki's Ignis (launched in February 2016), helped the B-SUV segment to gain momentum. During the period, the Cast sold 39,908 units while the Ignis sold 13,036 units.
Unlike the A- and B-SUV segment, sales volume in the C-SUV segment remained flat during the first six months of 2016. Models such as Mazda's CX-5 (released in November 2015 in Japan) and Lexus NX, one of the key-selling models, recorded slow sales due to end of lifecycle and fading of the new launch effect, respectively. During the period, 12,820 units (down 16.3% year-on-year (y/y)) the CX-5 and 5,743 units (down 24.8% y/y) of the NX were sold. Nevertheless, Nissan's X-Trail and Subaru's Forester helped the segment's sales and sold 30,696 units (up 5.3% y/y) and 14,910 units (up 38.8% y/y), respectively.
Outlook and implications
The Japanese government raised consumption tax from 5% to 8% in April 2014, the first increase in 17 years, followed by another dampener in the form of a 50% hike in mini-vehicle ownership tax in April 2015. The new vehicle market subsequently suffered, posting a 9.5% y/y contraction in 2015. As mini-vehicles became costlier after the ownership tax rise, consumers have begun to prefer other car types, including SUVs. As part of the SUV segment, small SUVs are priced below other types of SUVs. Due to their small size and easy handling, most of these models are able to offer better fuel economy, which is one of the reasons why they are being preferred by consumers. Among the new B-SUV models scheduled for launch in Japan during H2 of 2016 is Toyota's new C-HR SUV series, which the company plans to offer in hybrid and turbocharged gasoline (petrol) engine versions. We expect sales of the model of 14,290 units, helping to further boost sales of the B-SUV segment.
According to IHS Automotive forecasts, small SUVs will remain a popular choice among consumers and will take a market share of 57% of the total SUV share in full-2016 from 46% in 2015. This figure is expected to maintain its market share in the range of 57-61% until 2020. On the other hand, sale of C-SUVs will continue to lose steam and will account for a 25% market share in 2016, down from 30.3% in the previous year, and will remain in the range of 22.3% to 26% until 2020.
The Japanese market was expected to benefit from pre-emptive buying ahead of the originally scheduled consumption tax increase in April 2017. However, in a bid to support the country's struggling economy, the government has delayed the increase in value-added tax (VAT) to October 2019. Although the government will continue to offer incentives in an effort to offset the impact of the tax rise on mini-vehicles, including eco-car tax benefits and bonuses for eco-mini-vehicles, the deferment of the tax increase means that vehicle sales will not receive the expected boost this year. Against this backdrop, IHS Automotive forecasts a 4% y/y decline in Japanese light-vehicle sales (including mini-vehicles) during 2016 to nearly 4.75 million units. The SUV segment, however, will remain in positive territory, growing marginally by 0.3% y/y to 568,380 units. The segment will account for 12% of the total Japanese vehicle sales in 2016.
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.