Japan is the world’s third largest automobile manufacturer and home to well-known car brands such as Toyota, Nissan, Honda, Suzuki, Daihatsu, etc. which supply a material portion of the global market share. Not only a prominent exporter of vehicles, Japan also has a huge domestic market with approximately 61.87 million passenger cars on the road as of March 2022. While new car registration in its domestic market has been dominated by local brands, the average age of Japanese passenger cars in use has been steadily increasing over the decade, up to 8.8 years in 2021 reflecting Japan’s shrinking market size due to its rapidly aging demographics.
Generally speaking, around 20% of Japanese carbon dioxide emissions are from automobiles, producing some 101 million metric tons of CO2 in 2019, which decreased from 118 million metric tons in 2010. In 2019, the average fuel efficiency of new cars was about 22.5 kilometers per liter; however, in the same year, Japan issued new fuel economy standards which require an average fuel efficiency of 25.4 kilometers per liter by 2030. These gains in efficiency, as well as the lessening of the average age, should result in additional decreases in total emissions from automobiles annually for the coming years.
By the engine types, Hybrid Vehicles (HV) are the most common Electric Vehicle (EV) in Japan, with a sales ratio of 36.8%, which is substantially higher than that of the EU’s 9.6%, and, with this, it can be said that the Japanese electrification rate is the highest in the world. In general, HVs produce less CO2 emission than Internal Combustion Engine (ICE) cars with lower costs than Battery Electric Vehicles (BEV), whose share in Japanese industry is a marginal 0.6%, which is even lower than the EU’s 3.6%. In Japan, BEVs are not widely used because of a perception of their limited cruising range, long charging time, and high prices. Moreover, HVs enjoy a high level of popularity in Japan, and Japanese consumers have limited motivation to buy BEVs. Japanese manufacturers aim to switch to Fuel Cell Vehicle (FCV) without going through BEV “stage”. As of today, however, only two types of FCVs are available in the Japanese market. However, expectations are high for FCV expansion in Japan with their zero emissions, time will tell.
While roughly 15% (300,000 units) of Japanese passenger cars are from overseas, most of which are from the EU, EVs constitute only 8% of the total imported vehicles. However, considering the rapid spread of EVs in the EU region, EV imports from the EU to Japan are expected to increase over the coming years.
Submitted by Climate Scorecard Japan Country Manager James Hawrylak
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