April 4, 2017

Forecast for Japan’s Motor Vehicle Demand in Fiscal Year 2017

I. Passenger Cars and Commercial Vehicles

1. Total Demand for Passenger Cars and Commercial Vehicles
1) Total demand for passenger cars and commercial vehicles in fiscal year 2016 (ending March 31, 2017) is expected to finish at 5.04 million units, an increase of 2.0% from the previous fiscal year, with sales of passenger cars and CVs, excluding mini-vehicles, totalling 3.32 million units, up 6.2% from fiscal 2015, and sales of mini-vehicles reaching 1.72 million units, down 5.2%. The projected rise in fiscal 2016 in sales of passenger cars and CVs, excluding mini-vehicles, is attributable to the introduction of new models to the market, while the projected decline in mini-vehicle sales takes into account the lingering impact of the mini-vehicle tax hike that went into effect in April 2015 and a vehicle fuel efficiency issue that emerged in the first half of 2016.
2) For fiscal 2017, total demand for passenger cars and commercial vehicles is forecast at 5.0 million units, a decline of 0.8% from the previous fiscal year, with sales of passenger cars and CVs, excluding mini-vehicles, reaching 3.26 million units, down 1.8% from fiscal 2016, and sales of mini-vehicles rising to 1.74 million units, up 1.3%.

2. Standard and Small-Sized Passenger Cars
1) Sales of standard and small-sized passenger cars in fiscal 2016 are expected to total 2.88 million units, up 7.0% from the previous fiscal year. Factors behind this projected gain include the impact of new models introduced to the market.
2) Demand for standard and small-sized passenger cars in fiscal 2017 is forecast at 2.82 million units, down 2.1% from fiscal 2016, owing largely to the adoption of stricter standards for tax incentives eligibility for eco-friendly vehicles.

3. Mini Passenger Cars
1) Sales of mini passenger cars in fiscal 2016 should finish at 1.33 million units, a drop of 6.6% from fiscal 2015. Factors contributing to this decline include continuing repercussions from the increase in the mini-vehicle tax in 2015 and from the aforementioned fuel efficiency issue that arose in the first half of 2016.
2) Demand in this category in fiscal 2017 is forecast at 1.36 million units, up 2.1% from fiscal 2016, attributable to the anticipation that the relevance of the fuel efficiency issue that arose in 2016 will wane, favorably counterweighing any lingering impact from the mini-vehicle tax hike.

4. Standard Trucks
1) Sales of standard trucks in fiscal 2016 are projected to reach 176,000 units, up 5.1% from fiscal 2015, reflecting firm replacement demand and the sustained impact of public works spending. Of that projected total, sales of medium- and heavy-duty trucks are estimated at 95,000 units, up 7.2% from fiscal 2015.
2) In fiscal 2017, demand for standard trucks is forecast at 177,000 units, an increase of 0.6% from fiscal 2016, attributable to continued strong replacement demand and the positive impact of public works spending. Of that projected total, demand for medium- and heavy-duty trucks is forecast at 95,000 units, the same level as anticipated for fiscal 2016.

5. Small Trucks
1) Sales of small trucks in fiscal 2016 should total 252,000 units, a drop of 1.3% from the previous fiscal year, reflecting factors such as the decrease in the number of small commercial enterprises and the decline in transport demand.
2) Small truck demand in fiscal 2017 is forecast at 249,000 units, down 1.2% from fiscal 2016, attributable to the continued impacts of the aforementioned structural factors.

6. Mini-Trucks
1) Sales of mini-trucks in fiscal 2016 are projected to finish at 385,000 units, down 0.1% from fiscal 2015, primarily as a result of the declining ranks of users in the small-business and farming-household segments.
2) Demand for mini-trucks in fiscal 2017 is forecast at 380,000 units, down 1.3% from fiscal 2016, continuing to reflect the aforementioned structural factors.

7. Large Buses
1) Sales of large buses in fiscal 2016 should reach 6,500 units, up a solid 17.4% from fiscal 2015, largely the result of a surge in demand for touring buses.
2) Demand for buses in this category in fiscal 2017 is projected to climb to 7,400 units, up 13.8% from fiscal 2016, attributable to continued (although less robust than in fiscal 2016) demand for touring buses.

8. Small Buses
1) Sales of small buses in fiscal 2016 are on track to total 8,800 units, up 2.5% from fiscal 2015, owing primarily to the recovery in transport demand.
2) Sustained robust transport demand is forecast to further lift sales of small buses in fiscal 2017 to 8,900 units, a rise of 1.1% from fiscal 2016.

II. Motorcycles

1. Total Demand for Motorcycles
1) Japan’s domestic motorcycle market has remained in general decline since 2006. Factors contributing to this prolonged slump include the chronic shortage of motorcycle parking bays in urban areas, higher vehicle prices stemming from mandatory compliance with new emissions regulations, and shrinking model lineups. Nevertheless, while sales of Class-1 motor-driven cycles continue to fall, demand for Class-2 motor-driven cycles, mini-sized motorcycles and small-sized motorcycles remains firm, although prone to shifts in specific patterns. Against this backdrop, total domestic motorcycle demand in fiscal 2016 is forecast at 375,000 units, a decline of 5.8% from fiscal 2015.
2) With new emissions regulations coming into force on September 1 and the launch of new models compliant with them, projections for fiscal 2017 include a spike in last-minute demand for models scheduled to be phased out. This is expected to bolster demand for Class-2 motor-driven cycles, mini-sized motorcycles and small-sized motorcycles, particularly during the first half of the fiscal year. However, taking into account negative structural factors such as the aging trend among owners of Class-1 motor-driven cycles (which account for a large share of the motorcycle market), the ongoing decline in Japan’s youth demographic, and the likely rise in vehicle prices as a result of the stricter emissions regulations, total domestic motorcycle demand in fiscal 2017 is forecast at 369,000 units, down 1.6% from fiscal 2016.

2. Class-1 Motor-Driven Cycles (50cc & under)
1) Sales of Class-1 motor-driven cycles in fiscal 2016 should reach 165,000 units, down 8.3% from the previous fiscal year. Although sales recovered in the second half of the fiscal year after a decline in the first half resulting largely from the devastating earthquake in Kumamoto Prefecture in April 2016, the trend of shrinking demand for motorcycles in this category is expected to continue.
2) Demand in fiscal 2017 for Class-1 motor-driven cycles is projected at 153,000 units, a decline of 7.3% from fiscal 2016, reflecting the anticipated impact on vehicle prices of the new emissions regulations as well as the sustained decline in demand for vehicles in this category.

3. Class-2 Motor-Driven Cycles (51cc-125cc)
1) Sales of Class-2 motor-driven cycles in fiscal 2016 are expected to finish at 100,000 units, down 1.0% from fiscal 2015. Despite the limited number of new model launches, demand in both the first and second halves of the fiscal year helped to sustain sales of these motorcycles at a level close to that of the previous fiscal year.
2) Demand in this category in fiscal 2017 is forecast at 102,000 units, up 2.0% from fiscal 2016, attributable to continuing firm demand and the anticipated impact of new model launches.

4. Mini-Sized Motorcycles (126cc-250cc)
1) Sales of mini-sized motorcycles in fiscal 2016 should total 47,000 units, down 6.9% from fiscal 2015, reflecting the lower-than-average number of new models marketed during the year.
2) In fiscal 2017, new model launches in this category are expected to push sales to a projected 50,000 units, up 6.4% from fiscal 2016.

5. Small-Sized Motorcycles (over 250cc)
1) Sales of small-sized motorcycles in fiscal 2016 should reach 63,000 units, a decline of 5.2% from fiscal 2015, reflecting a drop in demand in the first half of the fiscal year attributable to the impact of the earthquake in Kumamoto Prefecture in April and despite the projection that sales in this category in the second half of fiscal 2016 are expected to align with the second-half level recorded in fiscal 2015.
2) In fiscal 2017, domestic launches of new models initially marketed overseas, along with continuing demand from long-time users and renewed demand from users after an extended hiatus in ownership, are projected to help boost total sales in this category to 64,000 units, up 1.6% from fiscal 2016.

[Data chart attached (PDF)]