Japan’s love affair with cars stalls

TOKYO — The country is known for the clout of its carmakers but Japan’s millennials have helped push car ownership to its lowest level in nearly two decades.

In March this year there were just 1.06 cars per household, according to the Automobile Inspection & Registration Information Association — the lowest since 1999 and down from a peak of 1.12 in 2006. Tokyo, with 3.1m cars registered, had the third-highest number out of Japan’s 47 prefectures, behind Aichi (where Toyota has its headquarters) and Saitama, but this represented only 0.45 cars for each household in the national capital, lower than in any other prefecture in Japan.

Tokyo’s low car ownership is partly due to its efficient public transport system. Traffic jams, as in many other major cities in Asia, also makes car ownership less attractive. Prospective car owners have one further disincentive: Japanese regulations dictate they must prove they have somewhere to park their car before they are permitted to buy from a dealer. Land is so expensive in Tokyo that car parking is hard to find.

These factors are putting off the young from owning and even driving cars, not only in Tokyo but other cities in the country, too. Data from the NLI Research Institute, a research company, showed that the percentage of men in Japan aged 20-24 with a driving licence fell from 87.8 per cent in 2001 to 79.9 per cent in 2015.

There was also a decline among young women, where the proportion with driving licences fell from 77.3 per cent in 2001 to 72.2 per cent in 2015. In contrast, 82.5 per cent of men aged 70-74 had driving licences in 2015. Trevor Mann, Mitsubishi Motors’ chief operating officer, thinks the trend of declining car ownership among the young is more apparent in Japan because of the country’s rapidly ageing population, which sets it apart from other countries.

He does, however, point out that congestion and the ease of travelling by public transport in Tokyo apply to other world cities, too, where car ownership among the young is softening. “What we need to keep an eye on as a manufacturer is not necessarily the trend for some cities’ or some countries’ car ownership declining, because when you look at the whole world and you look at the expected industry volume, it’s still growing,” says Mr Mann.

He points out that Mitsubishi, along with its strategic alliance partners Renault and Nissan, is looking at the potential growth in car-sharing and ride-sharing. “We are watching that very closely, not just as a company but also as an alliance, and we already investing in that from an alliance point of view,” he says.

Car-sharing providers, such as Park24, are already proving popular in cities like Tokyo. Park24 offers registered users the ability to rent cars from its fleet for as little as 15 minutes at a time. The company, which offers the service alongside its traditional parking lot business, had more than 888,850 car-sharing members at the end of September.

The decline of car ownership among young people owing to ride-hailing apps has been slower in Tokyo than in other major cities worldwide. This is partly because it is already home to the world’s largest taxi fleet, and the industry has clout, which means Uber has only a limited presence. Also, regulations prohibit private cars from carrying fee-paying passengers.

Tokyo’s low rate of car ownership could also be due to its particularly young adult population. Tokyo draws more young people from smaller cities and rural areas than any other centre in Japan. Naoko Kuga, a researcher at the NLI Research Institute, points out that although young men living in metropolitan areas are less interested in car ownership, demand is still relatively strong outside cities. Some analysts argue that a car is no longer the status symbol it was to older generations, and the urban youth of today see smartphones or experience-focused holidays as more desirable.

A 2014 academic study of car ownership looked at the intentions of undergraduates across Japan, Taiwan and Indonesia as well as in the cities of Berkeley in California, Shanghai in China, Utrecht in the Netherlands and Beirut in Lebanon. It found that the perceived social status brought about by car ownership was lowest among respondents in Japan and Utrecht. This attitude was reflected in their car-buying intentions. In Japan, fewer than two-thirds of students said they expected to buy a car within the next 10 years, lower than any of their counterparts apart from those in Utrecht.

This month, reports emerged that Toyota was considering halving the number of car models it offers in Japan from just over 60. The carmaker was said to be making medium-to long-term preparations for a society where young people were less likely to buy cars. FINANCIAL TIMES