Japan Auto Market in 2025 is off to a strong start. Sales grew 15% in January, reaching 327,965 units. Suzuki overtook Honda in 2nd, up 13.4%. Despite the favourable conditions, EV sales struggled, dropping 14.5%.
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 kicked off 2025 on a strong note. Sales totaled 327,965 units, reporting a year-on-year increase in volume of 15%.
Looking at cumulative data for January 2025 brand-wise, Toyota maintained 1st place with 112,418 sales (+20.6%), followed by Suzuki -up 1 spot- at 51,894 (+13.4%), Honda at 47,802 registrations (-5.8%), Nissan at 33,890 (-4.2%), Daihatsu with 32,613 sales (+149%), Mazda at 12,315 (+27.5%) and Mitsubishi -up 1 spot- with 8,524 new registrations (+2.6%).
Subaru fell 1 spot into 8th with 7,759 sales (-7.1%), in front of Lexus with 6,291 sales (-13.1%) and Mercedes, which closed the Top 10 with 3,466 new car registrations (+3.5%).
Looking at specific models, reported in the dedicated article, the Honda N-Box was still the best seller despite a 6% decrease in year-on-year sales, followed by the Toyota Yaris -up 1 spot- which grew 34.8%.
EV Market Trend and Outlook
Despite a favorable outlook, Japan’s EV market plunged 14.5% in January 2024, accounting for less than 2.5% of total car sales. Even local giants struggle to gain traction as consumer preferences remain resistant.
Mitsubishi led EV sales despite a 21.1% drop, followed by Nissan and Tesla, which continues to compete in a market 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.
