• Japan is one of the fastest-growing major markets for passenger vehicles. 
• Yet BEV sales are extremely low, with sales share in Japan at just 2% in H1 2023. 
• Chinese OEMs are yet to gain ground in the Japanese automotive market. 
• The share of embedded 5G connectivity in Japan is expected to reach 92% by the end of 2030. 

Beijing, Hong Kong, Seoul, London, New Delhi, Boston – October 23, 2023 

The Japanese auto market is one of the fastest-growing major markets globally. In H1 2023, passenger car sales in Japan grew by 27% YoY, according to the latest research from Counterpoint’s Global Passenger Vehicle Model Sales Tracker. Toyota held the top position in the domestic market, boasting a 50% share, followed by Suzuki and the Nissan-Renault-Mitsubishi Alliance. Japanese auto OEMs, namely Toyota, Honda, Suzuki, Subaru, Mazda, and the Nissan-Renault-Mitsubishi Alliance, collectively accounted for more than 90% of passenger vehicle sales in the country. Japan is the second country, after the US, where Chinese automotive companies have failed to make significant inroads. In 2023, BYD Auto, a Chinese auto OEM introduced its Atto 3 EV model in the Japanese market and only managed to sell around 1,000 units. 

Commenting on Japan’s EV adoption, Senior Analyst Soumen Mandal said, “In H1 2023, Battery Electric Vehicle (BEV) sales in Japan accounted for just 2% of total passenger vehicle sales in the country, while that for Hybrid Electric Vehicles (HEVs) was robust. Japan's ambitious goal is to transition all passenger vehicle sales to electrified options by 2035 and work toward achieving net-zero emissions by 2050. The Japanese government has introduced incentives in the form of subsidies for buying BEVs, Plug-in Hybrid Electric Vehicles (PHEVs), and Fuel Cell Electric Vehicles (FCEVs). Taking inspiration from the Inflation Reduction Act (IRA) in the US, Japan's government is also contemplating the implementation of tax incentives starting in 2024. Meanwhile, prominent domestic automakers such as Toyota, Honda, Nissan, Suzuki, Mitsubishi, Subaru, and Mazda unveiled their respective EV strategies comparatively late with most sharing a concrete plan as late as August this year.” 

Commenting on the connectivity adoption trend, Associate Director Brady Wang said, “In contrast to the relatively low market share of BEV sales in Japan, the adoption of in-vehicle embedded connectivity is notably more substantial. In H1 2023, almost half of the passenger vehicles sold came equipped with embedded connectivity. In-vehicle connectivity offers a plethora of services including navigation, monitoring essential vehicle data, in-vehicle music and video streaming. Additionally, ADAS, with high-level specifications, often relies on in-built connectivity to ensure data transmission in real-time. By 2030, it is expected that over 90% of all newly purchased passenger vehicles in Japan will come with embedded connectivity as a standard feature.” 

Wang continued, “Currently, 5G connectivity in passenger vehicles is very niche. Except for a select few models, most connected vehicles in Japan currently utilize 4G. Notably, the BMW six, BMW i4, and BYD Atto 3 stand out as three models equipped with built-in 5G connectivity. The share of embedded 5G connectivity in Japan is expected to reach 92% by the end of 2030.” 

Background 

Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry. 

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