Japan

Last modification: 25 Jan 19
Introduction: 

The State of Japan is a sovereign island nation in East Asia. The country is divided into 47 prefectures in 8 regions. 

Chapter 1: Economic and business environment

Demographics

Around 127 million inhabitants
Capital

Tokyo
Major cities

Osaka, Nagoya
Languages

Japanese (ja)
GDP

32,477.22 USD (2015)
Unemployment rate

3% in 2016
Main industries

GDP Composition by Sector:
Agriculture (1.1 percent)
Industry (23.0 percent)
Services (75.9 percent)

Industrial Production Growth Rate:
15.5 percent
Industries:
Among world's largest and technologically advanced producers of motor vehicles, electronic equipment, machine tools, steel and nonferrous metals, ships, chemicals, textiles, processed foods
Currency

JPY Japanese yen
Interest rate

0,10%
Political key info

Japan is a constitutional monarchy. The Emperor is a ceremonial figurehead. The executive power lies with the Prime Minister and his cabinet.
Japan consists of 47 prefectures, each overseen by an elected governor.
Inflation

0,40% in 2017

Chapter 2 : Automotive market, segments & sales

Total Car park

591 cars per 1000 inhabitants
New vehicle registrations (Cars, LCV, Trucks)
Year Cars Trucks Buses Total
2013 4,562,282 801,975 11,250 5,375,513
2014 4,699,591 851,314 11,983 5,562,888
2015 4,215,889 817,234 13,387 5,046,510
2016 4,146,458 808,302 15,498 4;970,258

* Source: Jama (http://www.jama-english.jp): 

2018 Figures

Japanese new vehicle sales in December decline 1.7% y/y to 388K units, 2018CY figure is 0.7% up to 5,272K.
* According to the Japan Automotive Dealers Association and Japan Light Motor Vehicle and Motorcycle Association, sales in Japan in December 2018 declined 1.7% to 387,525 units.
Sales with engine displacements above 660cc declined 4.4% to 250,879 units. Vehicles with engine displacements below 660cc increased 3.6% to 136,646 units.
* 2018CY sales increased 0.7% to 5,272,067 units.

Sales of new vehicles

　 Dec. 2018 Dec. 2017 Y-o-Y Jan.-Dec. 2018 Jan.-Dec. 2017 Y-o-Y
Non-mini vehicles 250,879 262,345 -4.4% 3,347,943 3,390,824 -1.3%
Mini Vehicles 136,646 131,908 3.6% 1,924,124 1,843,341 4.4%
Total 387,525 394,253 -1.7% 5,272,067 5,234,165 0.7%

Source: Japan Automobile Dealers Association, Japan Mini Vehicles Association
Top 5 brands (total market)

Best selling vehicle manufacturers in Japan in 2017 (Q1)

  1. Toyota
  2. Honda
  3. Nissan
  4. Suzuki
  5. Daihatsu
  6. Mazda
  7. Subaru
  8. Mitsubishi
  9. Isuzu
  10. Hino
Model preference top 5 (total market)

Best selling cars in Japan in 2017 (Q1)

  1. Nissan Note
  2. Toyota Prius
  3. Toyota C-HR
  4. Toyota Aqua
  5. Nissa Serena
  6. Honda Freed
  7. Toyota Sienta
  8. Toyota Vitz
  9. Honda Fit
  10. Toyota Voxy

Chapter 3: Company car market

Total Fleet Park (company cars)/Fleet penetration in total fleet sales

Leasing cars are not identifiable in the Japanese registration system, but the total amount of leased/released cars is estimated at 1.2 million units
Top 5 fleet brands (fleet market)

Toyota, Honda, Suzuki, Daihatsu, Nissan
Fleet Model preference top 5 (fleet market)

K-Car:  ALTO(Suzki), Mira(Daihatsu), Every ( Daihatsu), HIJET (Daihatsu), CAROL (Matsuda)
Car: NOTE (Nissan), Prius (Toyota), AQUA(Toyota), Fit (Honda), Carolla (Toyota)
Vans: HIACE (Toyota), Probox (Toyota), NV150AD (Nissan), NV350CARAVAN (Nissan),  Succeed (Toyota)

Chapter 4: Taxation & legislation

4.1 Car Taxation

There are 9 types of taxes related to automobiles and the system is complicated. It is a heavy burden for users because of the higher taxes compared to foreign countries.

Taxes on cars are as follows. There are many types of taxes imposed on the car and it is complicated as each taxable object is different. Since each subject and timing to be taxed are different, we will explain in order of tax activation. In addition, we will also touch on "Eco car tax reduction".


【At the time of purchasing a car】
● Automobile acquisition tax
: Tax is different for new car, secondhand car, and year

【At refueling】
● Gasoline tax: 53.8 yen / L
or diesel oil withdrawal tax: 32.1 yen / L
or Oil gas tax: 17.5 yen / kg
+ consumption tax: Gasudai × 8%
+ environment tax: 0.25 yen / L

[every year]
● automobile
tax:tax isdifferentwhich in the vehicle type and the exhaust
or light vehicle tax
greening the tax system by the case±volume:+ 15%

[vehicle inspection at the time 】
● Automobile weight tax
: Taxation according to classification and weight of

【tax cut】
carEco car tax reduction target
: car acquisition tax · automobile weight tax

greenization Tax object
: automobile tax or light motor
4.2 Income tax – Taxable persons Tax is due by the car owner, the car buyer or the car user
4.3 Company car  
4.4 Income taxes – drivers’ personal taxation The private use of a company car is treated as a benefit in kind and therefore as salary. If the employee pays a contribution, Consumption Tax is due on the contribution amount. If the emplolyee does not pay BIK, the employee and employer need to pay 50% each of a social insurance premium on the fair market value of the gasoline
4.5 Electric vehicles  
4.6 Future developments Tax on CO2 emissions is imminent
4.7 Legal background (import taxes) Passenger cars and parts are in general not submitted to duties (some exceptions apply however). Import Consumption Tax is due in all cases.
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Chapter 5: Car policies

Company Car Entitlement
Most often based on job need.

Which sectors provide most fleet cars?
Pharma
IT
Automotive Industry

Which job functions often include a company car?
Sales

Reference cars
 

Entry level / Junior sales Small sedan, only Japanese brands, preference for hybrid cars
Senior sales / Management level Mid sized sedan, Toyota Prius, only Japanese brand
Executive level Large sedan, SUV, Japanese and European brands

 

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Chapter 6: Funding methods

Overview of penetration of funding methods (buy or lease statement)  
Type of suppliers (captive versus multibrand, international versus local…)  
6.1 Outright purchase:  
Definition The vehicle is registered on the name of the Company and as a fixed tangible asset. It is depreciated over its full useful life
Pro’s and con’s

When purchasing a new car, we will depreciate in 6 years.
In other words, it will be six years later that the full amount can be accounted for as expenses. This period of six years is called the statutory useful life and is the useful life that the country has established that it can be used for this period. In contrast, in the case of used cars, special laws are set up in the calculation method of useful life as follows.

In case of a used car that has passed all of its legal service life
It is equivalent to 20% of the statutory useful life.
In the case of assets that have passed part of their statutory useful lives,
The number of years equal to 20% of elapsed years is added to the number of years less the years elapsed from the statutory useful life.
However, as a result of these calculations, if there is a fraction of less than one year, it will be rounded down, and if it is less than two years it shall be two years. This calculation is calculated by the number of months, and it returns to the last number at the very end. If you have purchased in the middle of the purchase year, you need to be careful as it will only be for expenses for the month from the purchase date to the closing date. If you purchase it near the end of the settlement, let's notice that the tax savings effect is thin.

In the year when the profit is likely to remain, we recommend purchasing a used car as an early tax saving measure. And if you purchase used cars, if you lose 4 years, the tax saving effect will be high.
Economic & legal ownership Full ownership, included Risks asd Rewards
Business practices  
6.2 Renting (Finance lease) :  
Definition Finance lease implies that the value at the beginning of the lease term is at least 90% of the fair value of the vehicle AND the lease term is at least 75% of the estimated economic life of the vehicle. In addition, risks and awards are transferred to the lessee
Pro’s and con’s  
Economic & legal ownership Risks and Rewards are transferred to the lessee, legal ownership remains with the lessor
Business practices Finance lease for company vehicles is unusal. Large assets with long useful lives however, are often leased on balance.
6.3 Full service leasing (operational leasing)  
Definition Renting agreement not capitalised and not depreciated by the lessee. The payments are treated as operational charges.
Pro’s and con’s No limit of deduction for monthly operating lease or rental costs, interests or fuel costs as long as the vehicle is necessary for perfoming business activities
Economic & legal ownership Ownership remains with the lessor
Business practices  
6.4 Fleet Management  
Definition  
Pro’s and con’s  
Economic & legal ownership  
Business practices  
6.5 Short term rental  
Definition  
Pro’s and con’s  
Economic & legal ownership  
Business practices  
6.6 Other funding methods  
   
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Chapter 7: Fuel

Fuel Type Segmentation

Consumption of gasoline was 770 thousand kℓ for commercial vehicles and 50, 530 thousand kℓ for private vehicles.

Also, the running kilometers were 7, 815 million kilowatts for commercial vehicles and 597,642 million kilometers for private cars.

The consumption of light oil was 16,896 thousand kℓ for commercial vehicles and 8,547 thousand kℓ for private vehicles.

Also, the running kilometers were 63,118 million kilograms for sales vehicles and 52,430 million kilometers for private cars.

Consumption of LPG and CNG was 1,557 kg 62,571 m 3 cubic meters, respectively.

Also, the running kilometers were LPG cars 8,493 million kilometers and CNG cars 260 million kilometers.


Fuel price evolution

Price between 2014 - 2017. 
Gasoline: Lowest 107 yen / L(2015 December), Highest 162.7 yen /L(2014 June)
Diesel : Lowest 87.7 yen / L(2015 December), Highest 137.8 yen /L(2014 June)
 

Fuel infrastructure
Japanese gas stations have a reputation for providing excellent service. Filling up the tank will be handled by the gas station employees. They will also clean you windscreen and mirrors and some will even take your rubbish to throw it away.

The number of gas stations in 2017 was 30747.
In the past few years, the rate of decrease gradually declined, but it is certain that the number of stands decreased by around 3% a year.
In the latest data, more than 30% (32.3%) of gasoline stands are self-service-stands.

Fuel card solutions.

Popular petrol cards such as Cosmo, ENEOS, Idemitsu etc.Gasoline cards have cards with "credit function" and cards with "no credit function" that can only be used for purely gasoline debits.

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Chapter 8 : TCO components

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Chapter 9: Safety, insurance and telematics

Safety
- Road fatalities conitnue to decline: in 2014 road fatalities in Japan totalled 4,113 (down 75,5% form mthe peak total of 16,765 fatalities in 1970).
- Objective: the world's safest roads. Making Japan's road the safest in the world is a stated goal of the Japanese government. 
- Japan has a national zero percent blood-alcohol level standard for driving. Driving under the influence of alcohol will lead to a confiscated license. You are even subject to up to 15 years in prison, should you cause any injury driving under influence.

Traffic accident situation per 100 thousand people in  2017
Number of Death: 2.91
Number of serious injuries: 29.1
Number of mild injuries: 428.5

Insurance
Japanese compulsory insurance (JCI) is mandatory for all vehicles owners and drivers. 

Even if it says in a word as "automobile insurance", there are two kinds, "compulsory automobile liability insurance" of compulsory entry and "arbitrary insurance" to join at will with one's own will.

Mandatory vehicle liability insurance is compulsory insurance that is obliged to join all cars. The purpose is "relief of the victim". Therefore, compensation for only injuries such as accident partner injured or died.

If a car accident happens and liability exceeding the compensation limit of mandatory vehicle liability insurance has occurred, it will be borne by himself. Also, as described above, "cars" such as cars and injuries / deaths of passengers on their side are not compensated. About the part that can not be covered with such mandatory vehicle liability, you can prepare for compensation by subscribing to voluntary insurance. 

Insurance money of mandatory vehicle liability insurance continues to be decreasing since 2014, and it is less than 820 billion yen in 2016. The number of payment of mandatory vehicle liability insurance has been around at around 1.2 million.

Average insurance premium: 74,000 yen
(Examples of young people * 1: 13,400 yen)
Subscription rate * 2: 100% mandatory vehicle liability
Option 87%
※ The average premiums are including compulsory insurance and voluntary insurance

Main Automobile insurance suppliers
AXA Insurance Co., Ltd.
E-Design Insurance Co., Ltd.
Secom General Insurance Co., Ltd.
Sony Property Insurance Co., Ltd.
Zurich insurance company
Mitsui Direct Insurance Co., Ltd.
Sponp 24 Insurance Co., Ltd.
SBI Insurance Co., Ltd.
Saison Automobile Fire Insurance Co., Ltd.

Telematics

Traditionally, the market for connected cars was focused on telematics services in the B2C area such as "T-Connect", "G-Link" and "Internavi". However, in recent years, in order to cope with automatic driving cars and EVs, we have acquired vehicle traveling information with sensors and changed to what we collect and analyze on the cloud. It is growing greatly in the area of ​​B2B market and R & D investment which are hard to stay in the eyes of consumers.

The market size of domestic connected car related market in 2016 is 398 billion yen, among which B2C market is 71.2 billion yen, B2B market is 185 billion yen, R & D investment is estimated to 141.8 billion yen. In the future, the number of connected cars equipped with communication units will increase, new services will expand, R & D investment will be made, and we predict that the market size of domestic connected cars will expand to 1 trillion yen in 2020. In addition, as the number of connected cars increases, services using probe information and cloud ADAS services are used, we anticipate that the size of the market in 2025 will be about 2 trillion yen, approximately twice as large as in 2020.

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Chapter 10: Environment

Trends in legislation

The expiration date of the eco-friendly car tax reduction is until March 2017, and as the consumption tax increases from 8% to 10%, it is considering abolition of automobile acquisition tax.

When the consumption tax reached 8%, tax reduction treatment of car acquisition tax was taken.

A private car
3% from April 2014
Mini car
2% from April 2014
When this becomes a consumption tax of 10%, both will be 0%.


Depending on the type of car to be purchased, there is a possibility that the new tax system will pay more tax. !

According to the new system, fuel consumption tax is levied on 0% -3% of the purchase amount due to the fuel efficiency of the car

Addressing Climate Change

  • Japan’s transport sector has made important progress in CO2 emissions reduction since the early 2000s.
  • The average fuel efficiency of new passenger cars in Japan has increased yearly. In 2013 it reached 21.3 km/ℓ, thereby largely surpassing the government’s 2015 target of 16.8 km/ℓ(2) and even exceeding its 2020 target of 20.3 km/ℓ.
  • Japanese automakers are expanding the supply of next-generation vehicles to the domestic market.

The CO2 challenge for Automakers

  • Increasing Vehicle Fuel Efficiency through early compliance with targets and reductions in vehicle weight
  • As a result of the efforts of Japan's automakers, the average certified fuel efficiency of new passenger cars has steadly risen. In 2013 it reached 21,3 km/l, significantly surpassing the 2015 target of 16,8 km/l and even exceeding the 2020 target of 20,3 km/l.
  • Promoting the wider use of next-generation vehicles. Japanese automakers are expanding the supply of the environmental performance vehicles to the domestic market. In 2013 there were 4.13 million next-generation vehicles in use in Japan, most of which were hybrids.
  • Reducing CO2 emissions at facilities and production plants
  • The Kyoto Protocol Target Achievement Plan & CO2 Reduction in Japan's Transport Sector. Of Japan's total CO2 emissions, the transportation sector accounts for roughly 20%, of which 90% are auto-emitted. Therefore, CO2 reduction in road transport is a priority concern.

CO2 Reduction in Road Transport in 4 areas

1. Measures to increase vehicle fuel efficiency

  • Fuel efficiency standards for vehicles should be adopted by all countries/Regions
  • Lighter vehicles with higher fuel efficiency should be increasingly introduced
  • Next-generation vehicles (incl hybrids) should progressively replace conventional vehicles
  • Green vehicle purchasing incentives should be implemeted to encourage the purchase and accelerate the replacement of the vehicle fleet

2. Measures to diversify automotive fuel supply 

  • Facilitate the use of low-carbon fuels such as biofuels and electric power

3. Measures to improve traffic flow

  • Road congestion
  • Low-carbon urban planning

4. Measures to promote the more efficient use of of vehicles

  • Drivers should be urged to practice ecodriving to help reduce fuel consumption and CO2 emissions.

Among Japan's carbon dioxide emissions (1206 million tons) in fiscal 2016, emissions from the transport sector (215 million tons) account for 17.9%. 86.2% of the transportation sector as a whole (15.4% of Japan), of which passenger cars accounted for 49.8% of the transportation sector (8.9% of the whole country), freight cars accounted for 36.4% of the transport sector (6.5% of the whole country) 

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Chapter 11: Mobility

Traffic conditions
Driving in Japan is quite complicated and expensive. Traffice move on the left side of the road. Road signs are only in Japanese language. City traffic is very congested. A 20-mile trip in Tokyo can take 2 hours.There is virtually no legal roadside parking.
In mountainous areas, roads are often closed during the winter and cars should be equipped with tire chains.

The total extension of Japan's road is 1,278,183.5 km as of April 1, The length of the road per 10,000 owned vehicles is about 155 km.

It is said that the loss time of congestion in Japan is about 40 hours per person per year (from 2012 data). The role of road traffic in industrial activities is large, and it is a big obstacle to improving the efficiency of domestic industrial activities and improving the competitiveness of industries due to congestion. Therefore, the National Police Agency and the Ministry of Land, Infrastructure and Transport cooperate with local governments, aiming to resolve traffic congestion thoroughly.

Mobility conditions for employees

In the Tokyo area, the automobile usage rate is 32%, and many movements are made using public transportation. On the other hand, in the rural area, 84% is used for automobiles, and regional disparities are seen. In metropolitan areas Car sharing etc. are also used for ordinary sales activities, flexible correspondence is being made.

Mobility solutions (car sharing, taxi, Uber, car pooling…)

The number of car sharing users and cars has steadily increased since 2010, and the number of users exceeded one million people in 2017. Top  Car sharing Brands in 2017 are Times Car Plus, Careco and Orix Car Sharing.

There are objections from the taxi industry, Japanese regulators are cautious about ridsharing and are still unusable.haAt the Uber, for the time being, along with the current hire, we are concentrating on taxi dispatch service.

 

 

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Chapter 12: Key trends to watch

Future of Fleet Management

Japan is essentially conservative and a revolution in fleet mgmt is not to be expected. Leasing will continue, for many more years to come, to be the main way of sourcing for corporate mobility. Most Japanese corporates are afraid of change; most Japanese "fleet managers" are lower level operational people; as a result, no-one will propose mobility solutions.

Safety

Japan is already at a good level of safety; with connected vehicles being implemented already today, the level of safety will increase even more.

Mobility

Where corporate mobility is popular and a necessity in many Asian countries, this is not the case for Japan. Few solutions are available. Leasing companies are not proposing alternatives to the leased car and amongst the OEMs, only NISSAN is conceived as progressive

Driver Behavior

Again, due to Japan's conservative attitude, no changes are to be expected

Country Behavior

Japan is an ageing society and its population is declining. This means that, moving forward, the domestic market is likely to shrink. 

Only pharmaceutical companies are expecting to experience growth. 

Alternatives to the one-employee-one-car setup are not gaining traction in Japan; car-sharing and ultra-short-term rental are popular, but not perceived as an alternative for corporate clients.

At the same time, costs (fuel, toll, parking, tax, leasing) are rising year after year

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