December 15, 2005

Forecast for Vehicle Demand in Japan in Calendar Year 2006

Motor Vehicles

1. Total Demand for Passenger Cars & Commercial Vehicles

  1. Total demand for passenger cars and commercial vehicles in calendar 2005 is estimated at 5.89 million units, an increase of 0.8% from the previous year. By category, new registrations for standard and small-sized vehicles are expected to total 3.96 million units, registering virtually no change from the 2004 figure. Mini-vehicle sales are projected at 1.93 million units, up 2.3% over 2004 to set a new all-time record.

    In the first half of 2005, total demand for passenger cars and commercial vehicles exceeded that of the same period in the previous year. This increase is attributable to a surge in small passenger car demand compared with the January-June 2004 period as a result of the introduction of new models and model changes, and to a robust market for mini-vehicles spurred also by model changes.

    Overall demand in the second half of 2005 is expected to finish on a par with the first half of the year. While there was a rise in truck and bus demand in continuing response to the compliance mandated by Japan’s Motor Vehicle NOx & PM Emissions Act, the decline in standard passenger car demand curbed the results for the July-December period.

  2. In 2006, despite steep crude oil prices, exchange rate fluctuations and other uncertain factors, Japan’s economy is expected to chart positive growth on the strength of:
    • Continued growth in exports, buoyed by solid economic conditions in the United States and China; and
    • Continuing gradual recoveries in personal income and employment owing to improved corporate performance, accompanied by steady consumer spending.

    Truck demand, meanwhile, is projected to grow owing to the following factors:
    • Increased capital investment stemming from improved corporate earnings and progress in stock adjustments; and
    • The compliance mandated by the country’s Motor Vehicle NOx & PM Emissions Act.

    In this overall scenario, total demand for passenger cars and commercial vehicles in calendar 2006 is expected to reach 5.93 million units, up 0.5% from calendar 2005, breaking down into 3.95 million standard and small-sized vehicles (up 0.8% over 2005) and 1.93 million mini-vehicles (about equal to 2005 results).

2. Standard and Small-Sized Passenger Cars

  1. Sales of standard and small-sized passenger cars in 2005 should finish at 3.38 million units, down 0.2% from 2004. Despite the gradually improving job environment and greater consumer confidence which have accompanied recoveries in production and in corporate earnings, longer single ownership of vehicles and longer vehicle service life have had an adverse impact on the market.

  2. For 2006 the demand forecast for this category is 3.39 million units, up 0.2% from 2005, taking into account the following:
    • Projections that the steady economic recovery will continue; and
    • Expectations for a positive response to the introduction of new models early in the year.

3. Mini Passenger Cars

  1. Minicar sales in 2005 are estimated at 1,400,000 units, a year-on-year increase of 2.0%, attributable to the economic recovery and to the introduction of new models and model changes.

  2. For 2006, with Japan’s anticipated continuing economic recovery, demand in this category is projected to edge up 0.3% over 2005 to 1,404,000 units.

4. Standard Trucks

  1. Sales of standard trucks in 2005 should total 196,000 units, up 5.0% from the previous year. Factors behind this result include the recovery in corporate earnings and business confidence, as well as the compliance mandated by the central government’s NOx and PM emissions regulations. Demand for heavy-duty trucks exceeding 8 tons in GVW should surge 3.0% over 2004 to 107,000 units.
  1. Demand in 2006 is expected to grow 4.6% from 2005 to a total of 205,000 units, owing to increased demand for NOx and PM regulations-compliant vehicles against a backdrop of strong corporate earnings and business confidence. The sub-category of heavy-duty trucks over 8 tons should account for 113,000 units of that total figure, up 5.6% from 2005.

5. Small Trucks

  1. Small truck sales in 2005 are estimated at 360,000 units, up 0.4% from 2004. While first-half sales failed to reach the level recorded during the same period of the previous year (when demand rose as a result of the enforcement of more stringent emission controls in the greater Tokyo region), second-half results were largely attributable to the impact of the national NOx and PM regulations.

  2. For 2006 the demand for small trucks is projected at 373,000 units, up 3.6% from 2005, in anticipation of a continuing business recovery and the need to comply with the Motor Vehicle NOx and PM Emissions Act.

6. Mini-Trucks

  1. Demand for mini-trucks in 2005 should reach a total of 535,000 units, a rise of 3.1% over 2004, explained by model changes and the general economic recovery.

  2. In 2006 the impact of model changes is expected to wane, and declining purchases are projected in this category among small-business operators, farming households and other principal users. Taking those factors into account, demand is forecast at 531,000 units, up 0.7% from 2005.

7. Large Buses

  1. In 2005 sales of large buses are expected to total 6,000 units, up 17.7% from the previous year—robust growth attributable to replacement demand triggered by the NOx and PM emissions regulations.

  2. In 2006 replacement demand resulting from the enforcement of the NOx and PM regulations should remain strong, with total projected demand (6,000 units) holding steady at the 2005 level.

8. Small Buses

  1. Total sales of small buses in 2005 should finish at 12,000 units, down 8.0% from 2004, as a result of replacement demand tapering off somewhat after a strong surge in the first half of 2004 in response to the tighter emission controls applied in the greater Tokyo region.

  2. In 2006 replacement demand in response to the national NOx and PM emissions regulations is expected to maintain total demand at the same level (12,000 units) as in 2005.

Motorcycles

1. Total Demand for Motorcycles

Japan’s motorcycle market has experienced conspicuous structural changes in recent years, including declines in both the number of younger purchasers and the number of new motorcycle driver’s licenses issued. On a more positive note, a new driver’s license category has been established for automatic-transmission motorcycles, the ban on tandem riding on highways has been lifted, and other improvements in the market environment have been implemented. Against this backdrop, JAMA sees current and projected demand as follows:

  1. Total domestic sales of motorcycles in calendar 2005 are estimated at 741,000 units, up 1.0% from the previous year. Although demand for Class-1 motor-driven cycles (50cc & under) will decline from the 2004 level, sales of Class-2 motor-driven cycles (51cc-125cc), mini-sized motorcycles (126cc-250cc) and small-sized motorcycles (over 250cc) are expected to exceed the levels reached in 2004.

  2. In 2006 the forecast is for increased demand for small-sized models compared to 2005, with sales of Class-1 motor-driven cycles and mini-sized motorcycles on a par with 2005 levels and a decline in sales in the Class-2 category. Total demand is projected at 730,000 units, down 1.5% from 2005.

2. Class-1 Motor-Driven Cycles (50cc & under)

  1. Total sales of Class-1 motor-driven cycles in 2005 should reach 472,000 units, down 5.7% from 2004. This reflects waning demand for low-priced models, resulting in flat sales of products not new to the market and, consequently, lower overall sales in this category.

  2. In 2006 demand in this category is forecast at 471,000 units, a 0.2% decline from 2005, although there should be positive demand for these motorcycles for commercial use.

3. Class-2 Motor-Driven Cycles (51cc-125cc)

  1. Sales of Class-2 motor-driven cycles in 2005 should finish at 88,000 units, a robust gain of 40.2% from the previous year, boosted by the introduction of new models in this category.

  2. In 2006 the impact of new models experienced in this category in 2005 is expected to decline, dragging down demand which is forecast at 71,000 units, a significant 19.3% drop from the previous year.

4. Mini-Sized Motorcycles (126cc-250cc)

  1. Mini-sized motorcycle sales in 2005 are estimated at 104,000 units, up 6.7% from 2004. Factors behind this growth are the positive impact of the new automatic-transmission motorcycle driver’s license category and greater demand for large scooters as a result of expanded model lineups.

  2. In 2006 the rise in demand for large scooters is expected to taper off, with overall sales in this category projected to finish on a par with the 2005 level (104,000 units).

5. Small-Sized Motorcycles (over 250cc)

  1. Sales of small-sized motorcycles in 2005 should total 77,000 units, up 5.7% from 2004. This gain is the result of various factors including more widespread awareness concerning the lifting of the ban on highway tandem riding, the introduction of the new AT license category, and new model launches.

  2. In 2006 demand in this category is forecast at 84,000 units, up 9.1% from the 2005 level, owing to the same factors behind the surge seen in the previous year.

PDF[Data chart attached (PDF)]