Japan Auto Market in 2025 continues on upward trend. Sales up to May grew 11.5% while EVs dropped 17.4%. Toyota retained leadership though the standout brand was Daihatsu, up 244.5% and 2 spots into 5th.
Economic Environment
Japan’s economy is projected to grow by 1.2% year-over-year in 2025, exceeding 1% growth, driven primarily by domestic demand over exports. Core inflation is expected to reach 2.1%, supported by steady wage growth, strong corporate profits, and labor shortages, fostering a positive cycle of rising wages and inflation. The Bank of Japan (BoJ) is likely to gradually raise its policy rate to 1% by year-end 2025, balancing caution over global trade risks and yen stability. Limited Federal Reserve easing may weaken the yen, giving the BoJ more room for rate hikes.
Unemployment is forecast to remain low at 2.4%, with labor shortages persisting despite increased participation by women, older workers, and foreign labor, keeping upward pressure on wages. Wage growth and consumer confidence are recovering after years of stagnation. Rising wages, supported by favorable spring wage negotiations, are boosting private consumption, with consumer confidence nearing a three-year high in 2024.
Automotive Industry Trend and Outlook
The Japanese Car Market continues its steady expansion in 2025. Cumulative sales up to May reported a year-on-year increase in volume of 11.5%, reaching 1,65 million units and building on the positive performanec of Q1.
Brand-wise, Toyota maintained 1st place (+17%), followed by Suzuki -up 1 spot- in 2nd (+0.8%), Honda -down 1 spot- in 3rd (-4.5%), Nissan in 4th (-13.7%), Daihatsu -up 2 spots- in 5th (+244.5%), Mazda -down 1 spot- in 6th (+19.7%) and Subaru -up 1 spot- in 7th (+14.5%).
Mitsubishi fell 2 spots into 8th (-2.6%), in front of Lexus (-4.3%) and Mercedes (-1.2%).
Looking at specific models, reported in the dedicated article, the Honda N-Box was still the best seller with a 4.1% increase in year-on-year sales, followed by the Toyota Yaris -up 2 spots- which grew 7.9%.
EV Market Trend and Outlook
Despite a favorable outlook, Japan’s EV market keeps struggling, losing 17.4% up to May 2025 and accounting for 2.28% of total car sales.
With one of the lowers ev share among Asian markets, local giants still struggle to gain traction and to accurately target consumer preferences.
Mitsubishi led EV sales despite a 17.1% drop, followed by Nissan and Mitsubishi. Tesla in 4th lost ground in a market already dominated by domestic brands.
Medium-Term Market Trend
Over the past decade, Japan’s auto market has struggled to regain its former strength. The industry peaked in 2018, but overall sales volume has declined by 13.3% compared to 2014.
The global pandemic in 2020 further disrupted the market, as widespread shutdowns of businesses and manufacturers led to an 11.1% decline in sales. Negative growth persisted until 2023, with the recovery proving sluggish, as the market failed to surpass the 4-million-unit sales threshold following the 2020 downturn. In 2023, a rebound appeared, with sales rising 15.8% to 3.99 million units. However, in 2024, the market took another hit, impacted by rising costs driven by geopolitical risks and fluctuating inflation.
The EV segment, while growing significantly over the decade, remains underdeveloped compared to other major economies. It first gained traction in 2022, saw sales more than double in 2023, but then declined by 5% in 2024. A combination of factors explains Japan’s cautious approach to EV adoption, including a consumer preference for hybrids, limited supply chain investments, and energy security concerns that have led to a stronger focus on hydrogen technology rather than full electrification.
Tables with sales figures
In the tables below we report sales for all Brands, top 10 Manufacturers Group and top 10 Models.
