Japan’s new vehicle market declined by 3.5% to 394,965 units in February 2026, from strong year-earlier sales of 409,348 units, according to registration data released by the Japan Automobile Manufacturers Association.

The vehicle market in Japan remains sluggish, against a backdrop of slow economic growth following recent interest rate hikes and weak domestic sentiment. GDP growth slowed to 0.2% year-on-year in the fourth quarter of 2025, reflecting mainly a slowdown in private consumption growth. The vehicle market is also up against strong year-earlier data, when Daihatsu’s production rebounded from earlier cuts following its safety test rigging scandal.

Vehicle sales in the first two months of the year declined by 2.9% to 762,717 units after rising by almost 16% to 785,606 a year earlier, with passenger vehicle sales declining by 6.8% to 636,374 units, while truck sales rose by over 23% to 124,816 units. Sales of medium and large buses and coaches declined by almost 18% to 1,527 units.

Toyota led the market lower year-to-date with a 6% sales decline to 232,761 units, reflecting mainly an almost 12% fall in passenger vehicle sales to 201,771 units. Its Daihatsu subsidiary continued to recover from earlier production stoppages, with sales rising by almost 15% to 94,296 units - driven by a sharp rise in truck sales. Suzuki’s sales declined by 3.3% to 124,561 units in this period, while Honda’s sales fell by 3.6% to 103,827 units and Nissan’s sales were down by 5.2% to 76,671 units.

Overseas brands account for around 4% of total vehicle sales in Japan, with sales falling by almost 9% to 30,560 units year-to-date - comprising mostly German brands such as Mercedes-Benz, BMW-Mini, Audi, and Volkswagen.

GlobalData is forecasting a 3.9% rise in light vehicle sales in the country to 4.69 million units in 2026, following a 3.1% rise to 4.52 million in 2025, before declining slightly in 2027.