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Next-generation vehicles, which are automobiles that use propulsion technologies other than conventional gasoline or diesel combustion systems, have achieved an established position in the Japanese car market in 2024. In fact, in 2023, the share of new car registrations that were next-generation vehicles surpassed the ** percent mark for the first time in history and has further increased in the following year. In 2024, hybrid vehicles were, with approximately **** million new registrations, by far the most common type of alternatively powered car. 

Automobile-related taxes

Car ownership in Japan is a costly affair. Four different cost sources are associated with owning a car, namely the purchase of a vehicle, maintenance expenses, fuel expenses, and taxes. The automobile taxing scheme in Japan imposes levies for different occasions. This includes one-time expenses, such as the consumption tax on the purchase of the vehicle and the environmental performance-based tax. Furthermore, car owners need to pay taxes that are due during the ownership, such as the gasoline tax, the consumption tax on fuel, the automobile tax, and the tonnage tax. Not all car owners have to pay for all types of taxes. Electrified vehicle owners, for instance, pay reduced environmental performance-based taxes or are entirely exempt from them, while mini-car (kei car) owners pay mini-vehicle taxes that are considerably lower than the taxes for standard-sized vehicles. Still, on average, the expenses of automobile-related taxes of car owners in Japan are high when compared to the rest of the world. 

Next-generation vehicle ownership

Currently, vehicles with conventional propulsion systems, running on gasoline or diesel, still comprise the majority of cars on Japan’s roads. However, surveys into consumer purchasing intentions in the future show that a sizable share of people intend to buy next-generation vehicles with their next purchase. Among those intent on buying battery electric vehicles (BEV), lower fuel costs represented the leading reason for their decision.