The Light Vehicle Market in Japan: A Case of Market Protectionism or Cars Simply Meeting Essential Needs for Mobility?

Type de publication:

Conference Paper


Gerpisa colloquium, Kyoto (2014)


The main regulations for light vehicles (mini cars) in Japan are as follows:
- Maximum engine size of 660 cc with a maximum power of up to 64 hp.
- Car body size not exceeding 3.4 meters in length, 1.48 meters in width, and 2 meters in heights.
For the first time in 2013, the market of these light vehicles became with 37% of market share the largest segment in the Japanese car market. With over 2 Million mini cars sold in 2013 (including mini commercial vehicles) the market is approximately of the same size like the whole British or Italian automobile market. And, according to market surveys, the popularity of light vehicles is further growing amongst all income groups in Japan. In some prefectures more than 50% of the car fleet consists of mini cars and (statistically) every household owns a mini car. But there are further peculiarities: The market for mini cars is completely in the hands of Japanese manufactures. There is simply no foreign competition in this segment. More than that, despite the fact that all eight Japanese car companies offer mini cars, only three, Daihatsu, Suzuki and Honda, are producing mini cars. And finally, despite the fact that Japan is a high cost country for production and the profit margin of small cars is usually not very high, all light vehicles are produced in Japan, there is no production in neighboring low cost Asian countries and there is also almost no export of light vehicles to oversea markets.
Looking closer, however, there are more striking peculiarities to be observed that clearly separate the light market segment from the other car segments in Japan.
1. The density of mini cars is reciprocally connected to population density, railroad kilometers (availability of public transport) and average income
2. The share of female car owners in the light vehicle segment is 65%, 25% higher than in the segment of small cars
3. 32% of drivers of mini passenger cars and even 55% of drivers of light commercial vehicles are over 60 years old, and finally
4. 98% of car buyers of mini cars never buy a small car (up to 2000 cc) or a standard car (over 2000 cc) again.
So the question is, why are these light vehicles so popular in Japan. Is it just because of the fact that taxation is considerably lower than small cars and that in communalities with less than 100000 inhabitants holders of light vehicles do not have to provide proof for a parking space before being allowed to register the car? Or are there other reasons for the popularity of light vehicles? And, is the trend towards light vehicles indicating a change in attitudes towards cars that might be a chance for new forms of mobility?
Following a short development history of the light vehicle segment, the paper will on the basis of a wide range of data discuss the above questions also with regard to the dispute in trade negotiations for an EU-Japan free trade agreement, in which the EU is urging Japan to abolish the taxation benefits for light vehicles, which the EU perceives as a kind of market protection negatively affecting sales of small import cars that don’t meet the requirements of mini cars.

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