Japan is the fourth largest automotive market in the world after China, the United States, and India. In 2024, 4,421,494 new passenger vehicles were sold in Japan, a decrease of 7.5 percent from the previous year.  In 2024, auto manufacturing comprised 2.9 percent of Japan’s GDP and 13.9 percent of its manufacturing GDP. Japan’s automotive industry – encompassing manufacturing, sales, maintenance, transportation, and services – employs 5.58 million people, or 8.3 percent of Japan’s working population.

Strong Domestic Brands

Home to automakers such as Toyota, Honda, Nissan, Mazda, Suzuki, Subaru and Mitsubishi as well as many major suppliers, such Denso, and lithium-ion battery maker, Panasonic, Japan has been recognized as a global leader in the production of motor vehicles. Japanese automakers have a wide-ranging and customer-focused dealer network throughout the country, emphasizing longer warranties, individualized service, and after-sales care. This helps explain why these domestic brands dominate Japan, holding approximately 95 percent of the market in 2024, with the Toyota Group accounting for about 41 percent alone. In 2024, non-Japanese brands accounted for only 5 percent of all new vehicle sales in Japan with established European importers, namely German luxury brands, occupying the primary import niche. 

Dominance of Kei Cars

Because of the country’s small roadways, high fuel prices, and strong environmental consciousness, the Japanese market is heavily focused on smaller, more fuel-efficient automobiles. Kei (lightweight, mini) cars, which make up more than one-third of all new vehicle sales, are popular due to their low cost of ownership and maintenance as well as their eligibility for tax and insurance incentives. Kei cars are defined as having engines with displacement no larger than 660cc and no longer than 3.4 meters.  

High Hybrid Vehicle (HV) Adoption

Japan places a high value on fuel-efficient automobiles and Hybrid Vehicles. Despite rising fuel prices, HV sales increased once more in 2024, surpassing two million units for the first time. Currently, 54.8 percent of new passenger car sales are HVs.

Table: New Vehicle Sales in Japan 

Data Sources: JAMA (Japan Automobile Manufacturers Association), Japan Automobile Dealers Association (JADA), Japan Light Motor Vehicle & Motorcycle Association (Zenkeijikyo), Nikkan Jidosha Shimbun.

Note: 2025 estimated data not available at time of publishing.

Leading Sub-sectors

Advanced Driver Assistance Systems (ADAS) 

Japan has a rapidly aging population. As of 2023, the National Police Agency reported that 19.84 million people 65 and older have driver’s licenses, making up 24.2% of all license holders. This significant proportion underscores how critical it is to address safety issues pertaining to senior driving. Advanced Driver Assistance Systems, or ADAS, are technologies that use sensors, cameras, and algorithms to deliver warnings, guidance, and even automated interventions to help drivers and improve road safety. These systems are particularly beneficial for elderly drivers, as they may compensate for age-related declines in reaction time, vision, hearing, and cognitive function. In Japan, the government has been actively promoting the adoption of ADAS to reduce traffic accidents and improve road safety. Updated government regulations and policies require automakers to integrate ADAS into their vehicle developments to meet new safety standards.

Electric Vehicles

In 2024, new Electric Vehicles (EVs) accounted for only 1.35 percent of new vehicles sold in Japan. 59,736 new EVs were sold in Japan, a 32.5% decline from 2023 sales, according to Japan Automobile Dealers Association and Japan Light Motor Vehicle & Motorcycle Association. Despite the overall decline in EV sales, non-Japanese manufacturers such as BYD saw significant growth in 2024. For the first time, BYD’s EV sales in Japan surpassed Toyota’s EV sales, and experienced a 54% increase in sales from the previous year. Although Japan lags behind other developed markets in EV penetration, rising gasoline prices and growing awareness of environmental issues are encouraging Japanese customers to consider more fuel-efficient alternatives, including EVs. The Japanese government has set ambitious targets to accelerate the adoption of EVs. By 2030, the network of charging infrastructure is expected to reach 150,000 chargers; by 2035, EVs are expected to make up all new passenger car sales. To encourage consumers to make the switch to EVs, the Japanese government provides subsidies to help with the higher initial costs of EVs.

Opportunities

• Auto-tech solutions – autonomous driving, ADAS/sensing, EV battery/charging technology
• AI and IoT solutions for automotive repair and maintenance services
• Training services for automotive technicians on new technologies such as autonomous vehicles and electrified vehicles

Resources 

Major Shows

• Automotive World 2025 September Show – September 17-19, 2025, Makuhari Messe
• Automotive World 2025 Nagoya Show – October 29-31, Port Messe Nagoya
• Japan Mobility Show 2025 – October 30-November 9, 2025, Tokyo Big Sight
• Automotive World 2026 Tokyo Show – January 21-23, 2026, Tokyo Big Sight
• The 23rd International Auto Aftermarket Expo 2026 – February 12-14, 2026, Tokyo Big Sight

Industry Associations

• Japan Automobile Manufacturers Association
• Japan Automobile Dealers Association (JADA)
• Japan Light Motor Vehicle & Motorcycle Association (Zenkeijikyo)
• Japan Automobile Importers Association (JAIA)

Contact Us

For more information about Japan’s Automotive sector, please contact the U.S. Commercial Service, Japan at Office.Tokyo@trade.gov.