Japan's Imported Car Market Grows for First Time in Seven Years, Driven by Electrification

In 2025, sales of imported vehicles in Japan (excluding Japanese domestic brands) rose by 3% year-over-year to 238,081 units—the first increase in seven years. This growth was primarily driven by battery electric vehicles (BEVs): imports of BEVs surged 34% year-over-year to 33,299 units, accounting for 14% of total imported vehicle sales, up 3 percentage points from the previous year. By the end of June 2025, the number of available imported BEV models in Japan had grown from just 20 in 2020 to 173, with the number of represented brands expanding from 10 to 22. Meanwhile, the Japanese government announced that starting January 2026, the subsidy cap for BEV purchases would be raised from ¥900,000 to ¥1.3 million, further stimulating consumer demand. Although the overall new energy vehicle (NEV) penetration rate in Japan stood at only 2.8% as of September 2025 (with BEVs accounting for 1.7%), imported BEVs have already taken a dominant position in this segment and are playing a pivotal role in advancing Japan’s electrification transition. Chinese automaker BYD stood out notably, doubling its annual sales in Japan in 2025 to 4,536 units. Its SUV model Sealion 7, launched in April 2024, has remained a strong seller. In October 2025, BYD unveiled the Racco—a lightweight BEV developed specifically for the Japanese market—at the Tokyo Motor Show, alongside the plug-in hybrid Sealion 06 DM-i, officially entering Japan’s kei car segment. The Racco is scheduled to launch in Japan in summer 2026. Tesla did not disclose specific sales figures, but vehicles categorized under “Others” totaled 13,717 units—mostly attributed to Tesla. Traditional German brands, meanwhile, saw declines: Mercedes-Benz sales fell 6% year-over-year to 49,654 units, though it retained its position as the top-selling imported brand; BMW sales dropped 7% to 34,044 units. Their market shares have been eroded by emerging EV-focused brands, reflecting challenges in the pace of their electrification strategies and market adaptability.