Market Overview

According to Japan Automotive Leasing Association, the number of vehicles for automotive leasing as of end of March 2024 increased from the corresponding period of the preceding year.
Corporative demand, which was affected by the spread of work from home and sluggish supply by automakers after breakout of COVID-19 crisis, turned for the better as socio-economic activities went back to normal. The number of vehicles for automotive leasing for companies at the end of March 2024 recovered to the level subtly exceeding those of pre-pandemic years.
Meanwhile, personal demand has been growing steadily. Boosted by the introduction of new services and entrance of new market players, attention on automotive leasing is rising.

Noteworthy Topics

Promoting A Shift to HEV & Building Expertise for Provision of BEVs for Achieving Decarbonized Society

In line with the Japanese government's policy to achieve carbon neutrality by 2050, domestic automakers are moving forward with electrification. Their goal is to achieve 100% electric vehicles in new passenger car sales by 2035 and 100% electric or decarbonized fuel vehicles in new light commercial vehicle sales by 2040.

In this context, the auto leasing industry has been increasing the number of electric vehicles in its fleet, with further growth expected in the future. While hybrid electric vehicles (HEVs) produced by Japanese automakers are recognized for their fuel efficiency and are leading the industry, the current market environment for battery electric vehicles (BEVs) and other factors suggest that the most feasible option for the domestic auto leasing business in the coming years is to focus on replacing gasoline-powered vehicles with hybrid electric vehicles (HEVs).

In the mid- to long-term, the adoption of battery electric vehicles (BEVs) remains a key strategy for achieving a decarbonized society. Major companies and municipalities with strong environmental awareness are increasingly interested in introducing BEVs. However, many have either abandoned or only partially introduced BEVs, primarily due to factors such as high vehicle costs, limited model options from domestic automakers, concerns about the resale value of used vehicles, and the state of charging infrastructure. Despite these challenges, we believe it is crucial for automotive leasing companies to begin offering BEVs and to build the associated expertise in preparation for the anticipated surge in demand for the shift from internal combustion engine (ICE) vehicles to BEVs.

Future Outlook

The number of vehicles secured for automotive leasing projected for end of March 2025 is projected to reach 4.35 million (103.8% of the corresponding period of the preceding year).

In leasing to corporate customers, the replacement of vehicles is progressing as the shortage of new fleet due to the supply chain disruptions that had persisted since the COVID-19 crisis has been resolved. However, some vehicle types are still experiencing delays due to prolonged delivery times. Given the circumstances, we expect the number of lease vehicles for corporate customers to remain flat or slightly increase.

Meanwhile, businesses are expanding their vehicle offerings and subscription services for individuals, while competition intensifies, as evidenced by the increased focus on face-to-face sales activities. Car leasing for individuals is expected to continue strong sales at the current growth rate.
Moving forward, we anticipate growth in acquiring new corporate customers, particularly in regional areas, as well as continued expansion in leasing to individuals.

Research Outline