April 8, 2016

Forecast for Japan’s Motor Vehicle Demand in Fiscal Year 2016

I. Passenger Cars & Commercial Vehicles

1. Total Demand for Passenger Cars & Commercial Vehicles
1) Total demand for passenger cars and commercial vehicles in fiscal year 2015 (ending March 31, 2016) is expected to finish at 4.94 million units, down 6.8% from the previous fiscal year, with sales of passenger cars and CVs, excluding mini-vehicles, totalling 3.13 million units, up 0.3% from fiscal 2014, and sales of mini-vehicles reaching 1.8 million units, down by 16.9%.  Fiscal 2015 should therefore close with sales of passenger cars and CVs, excluding mini-vehicles, at about the same level as in fiscal 2014, when sales slumped following the last-minute rush in demand prior to the increase in the national consumption (sales) tax effective from April 2014.  The projection for mini-vehicle sales (down 16.9%) is considerably harsher in view of the plunge in demand for these vehicles following their robust market performance before the mini-vehicle tax hike that went into effect from April 2015.
2) For fiscal 2016, notwithstanding an anticipated lingering impact from the aforementioned hike in the mini-vehicle tax, total demand for passenger cars and commercial vehicles is forecast at 5.26 million units, an increase of 6.5% from the previous fiscal year, with sales of passenger cars and CVs, excluding mini-vehicles, reaching 3.3 million units, up 5.3% from fiscal 2015, and sales of mini-vehicles rising to 1.96 million units, up 8.5%.  This projected growth is based primarily on the anticipation of another rush in demand prior to a further increase in the consumption tax scheduled to take effect from April 2017.

2. Standard & Small-Sized Passenger Cars
1) Sales of standard and small-sized passenger cars in fiscal 2015 are projected to total 2.69 million units, down 0.1% from the previous fiscal year.
2) Demand for standard and small-sized passenger cars in fiscal 2016 is forecast at 2.84 million units, up 5.5% from FY 2015, owing largely to the anticipated rush in demand prior to the April 2017 hike in the consumption tax.

3. Mini Passenger Cars
1) Sales of mini passenger cars in fiscal 2015 should finish at 1.42 million units, a decline of 19.4% from FY 2014, owing to the plunge in demand for these vehicles resulting from the increase in the mini-vehicle tax from April 2015.
2) Demand in this category in fiscal 2016 is forecast at 1.55 million units, up 9.3% from FY 2015, buoyed by another wave of last-minute demand before the scheduled increase in the consumption tax from April 2017.

4. Standard Trucks
1) Sales of standard trucks in fiscal 2015 are projected to total 170,000 units, up 1.0% from fiscal 2014, reflecting solid replacement demand and the continuing impact of increased public works spending—the two factors which also boosted growth in this category in the previous fiscal year.  Of that projected total, sales of heavy- and medium-duty trucks are estimated at 88,000 units, up 0.4% from FY 2014.
2) In fiscal 2016, demand for standard trucks is forecast to reach 175,000 units, an increase of 2.9% from fiscal 2015.  Although the impact of public works spending is expected to gradually decline, strong replacement demand should sustain sales of trucks in this category.  Of the projected total in FY 2016, demand for heavy- and medium-duty trucks is forecast at 90,000 units, up 2.3% from FY 2015.

5. Small Trucks
1) Sales of small trucks in fiscal 2015 should total 260,000 units, a gain of 3.6% from the previous fiscal year, with firm replacement demand being the key factor behind this anticipated growth.
2) Demand for small trucks in fiscal 2016 is forecast at 274,000 units, up 5.4% from fiscal 2015, as a result of continued strong replacement demand.

6. Mini-Trucks
1) Sales of mini-trucks in fiscal 2015 are expected to total 385,000 units, down 6.6% from fiscal 2014, with the main factor behind this year-on-year decline being the drop in sales following the rush in demand in the second half of FY 2014 prior to the increase in the mini-vehicle tax effective from April 2015.
2) Demand for mini-trucks in fiscal 2016 is forecast to reach 406,000 units, a gain of 5.5% from the previous year, reversing the decline in demand following the increase in the mini-vehicle tax in April 2015.

7. Large Buses
1) Sales of large buses in fiscal 2015 should finish at 5,300 units, up a solid 16.4% from fiscal 2014, largely as a result of a surge in demand for touring buses (or “coaches”).
2) Demand for buses in this category in fiscal 2016 is expected to climb to 5,600 units, up 5.7 % over fiscal 2015, attributable to sustained demand (although less robust than in FY 2015) for touring buses.

8. Small Buses
1) Sales of small buses in fiscal 2015 are on track to total 8,500 units, an increase of 12.1% from FY 2014, owing primarily to a recovery in transport demand.
2) Sustained strong transport demand is forecast to push demand for small buses in fiscal 2016 to 8,800 units, a gain of 3.5% over fiscal 2015.

II. Motorcycles

1. Total Demand for Motorcycles
1) Japan’s domestic motorcycle market has seen a general decline over the past decade or so.  Factors contributing to this prolonged slump include the chronic shortage of parking bays in urban areas, higher vehicle prices stemming from mandatory compliance with new emissions regulations, and shrinking model lineups.  However, the past few years have seen increases in demand for Class-2 motor-driven cycles, mini-sized motorcycles and small-sized motorcycles, albeit against a backdrop of steadily falling sales of Class-1 motor-driven cycles which help account for the projection of total motorcycle sales of 403,000 units in fiscal 2015, down 4.5% from fiscal 2014.
2) Demand in the Class-2 motor-driven cycle, mini-sized motorcycle and small-sized motorcycle categories is expected to remain firm in fiscal 2016.  In contrast, negative factors include the aging trend among owners of Class-1 motor-driven cycles (which account for the majority of the market), the decline in Japan’s youth demographic, and the continued impact of the hike in motorcycle tax rates (as a second phase of the increase in the mini-vehicle tax) in effect from April 1, 2016.  As a result, total domestic motorcycle demand in fiscal 2016 is forecast at 392,000 units, a decline of 2.7% from fiscal 2015.

2. Class-1 Motor-Driven Cycles (50cc & under)
1) Sales of Class-1 motor-driven cycles in fiscal 2015 should reach 187,000 units, down 12.9% from the previous fiscal year.  This decline is largely attributable to structural factors, and the continuing difficult riding environment for these vehicles.  Moreover, while new products were introduced by all the manufacturers in FY 2015, there were also cutbacks in their lineups, as well as cases of remodelled versions pushing up vehicle prices.  The second half of the fiscal year saw sales stagnate, accounting for the projected year-on-year 12.9% decline.
2) Although there are hopes that new model launches will have positive impacts on sales, demand in fiscal 2016 for Class-1 motor-driven cycles is forecast at 173,000 units, down 7.5% from FY 2015, as a result of the continuation of the medium- to long-term decline trend in this category.

3. Class-2 Motor-Driven Cycles (51cc-125cc)
1) Sales of Class-2 motor-driven cycles in fiscal 2015 are expected to finish at 97,000 units, a gain of 5.4% over FY 4014 that is attributable primarily to the solid sales performances recorded by new models, especially in the first half of the fiscal year.
2) Demand in this category in fiscal 2016 is forecast at 98,000 units, up 1.0% from FY 2015, buoyed in great part by enhanced product lineups backed by the domestic marketing of global models from the manufacturers.

4. Mini-Sized Motorcycles (126cc-250cc)
1) Sales of mini-sized motorcycles in fiscal 2015 should total 52,000 units, up 4.1% from fiscal 2014, reflecting the manufacturers’ concerted efforts to energize the market on the strength of expanded lineups featuring the launch of global models.
2) Further new product launches are expected to support continued market expansion in this category in fiscal 2016.  Combined with the impact, in the second half of the fiscal year, of an anticipated rush in last-minute demand for this class of motorcycle prior to the scheduled consumption tax hike in April 2017, sales of mini-sized motorcycles are forecast to close out FY 2016 at 53,000 units, up 1.9% from the previous fiscal year.

5. Small-Sized Motorcycles (over 250cc)
1) Sales of small-sized motorcycles in fiscal 2015 should finish at 67,000 units, up 2.5% from FY 2014, reflecting the impact of new product launches.
2) In fiscal 2016, the motorcycle manufacturers’ introduction of new models in this category is expected to be on a par with FY 2015.  The combined impact of expanded lineups and a last-minute rush in demand prior to the scheduled consumption take hike in April 2017 should boost FY 2016 sales of motorcycles in this category to 68,000 units, up 1.5% from the previous fiscal year.

[Data chart attached (PDF)]