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Japan’s auto market faces intensifying competition as BYD, Hyundai, and Kia expand, US trade talks progress, and growth slows amid shifting demand. Read on to unpack the latest Behind the Headlines:
The S&P Global Mobility AutoIntelligence service provides daily analysis of global automotive news and events. We deliver timely context and impactful analysis for navigating the fast-moving industry. Behind the Headlines offers a bi-weekly dive into recent top stories.
Toyota, Honda and Mazda were the high points the Japan Mobility Show 2025, though there was also a strong presence from Nissan, Mitsubishi, Subaru and Suzuki. As BYD, Hyundai and Kia are looking to expand in the Japanese market, they didn’t miss the chance to show off. US automakers have a limited presence in the Japanese market and did not participate in the show. However, new trade negotiations may change that dynamic in the future.
Two key concepts from the Toyota brand were a tease of the next-generation Corolla and the IMV Origin.
The Corolla concept takes style and excitement not often associated with this vehicle model. The Corolla Concept says, “Look at me,” with plenty of potential to deliver when the concept design is settled down for production. Toyota didn’t give many details, though the car will have battery electric, plug-in hybrid electric, internal combustion engine and hybrid powertrain solutions. The interior is as much of a rethink as the exterior, with a simplified layout. The dash is set further from the driver and passenger, and there is a screen for the passenger to fold away when not in use. A floating center console increases space. Toyota did not confirm production timing for the new generation, but S&P Global Mobility data shows the next Corolla is expected to first enter production in late 2028.
Designed for rural Africa, the IMV Origin—a flat platform with a frame around a seat and driving controls—is meant to be finally assembled by the owner. The frame around the driver does not carry screens and creature comforts, and the vehicle is designed to handle the rough roads and terrain of Africa. Buyers can also configure the cargo area. Koji Sato, president and CEO of Toyota, noted this vehicle can create local jobs for final assembly and enables customers “to define the vehicle on their own terms.” Sato called this the concept of “deliberate incompleteness.”
The first Century sedan launched in 1963 but has never been its own brand. That changed at the Japan Mobility Show 2025. Instead of being one or two vehicles offered through the Toyota channel, Century becomes a standalone brand with at least three vehicles.
The Century Coupe Concept will eventually join the stately sedan and SUV on offer today and demonstrates the future design direction and attitude of the new brand. Future Century owners will be able to tailor interior and exterior colors and finishes. The sensational concept, in a brilliant orange and with an exquisitely detailed interior, explored design though Toyota held back details like launch timing and propulsion system. Toyota sees the Century brand as a bespoke, cultured vehicle that will take on Rolls-Royce and Bentley. Century will occupy a higher luxury tier than Lexus.
Track regulatory changes, automaker strategies, and production trends across global vehicle markets.
Lexus took bold steps at the Tokyo motor show, revealing four concept vehicles meant as future explorations and brand design statements, with no details on when or if they will be produced. Each of the concepts was purposeful toward describing Lexus’s future.
The vehicles included a six-wheeled luxury people mover (the LS Concept); a fresh take on a four-door, two-row family utility (the Coupe Concept); an exploration of the next Lexus sports car called the Sport Concept; and a three-wheeled electric pod meant for urban use (the Micro Concept).
Lexus also shifts the letters LS from signifying Luxury Sedan, as they have since the first LS was introduced in 1989, to Luxury Space. Chief branding officer Simon Humphries said, “Space is freedom. And space is privacy. Two commodities that are simply priceless. In a frenetic world, what greater luxury is there than that?”
Each concept reinterprets the Lexus spindle grille with a more dramatic look, using light rather than chrome to define its shape, even as the vehicles themselves differ greatly in form and surfacing.
The Lexus concepts also explored more simplified interiors with less prominent screens, offering a cleaner and elegant look. For some, this included passenger-side screens that slip out of the way when not in use.
In contrast to automakers leaning into mixed propulsion solutions, Honda focused on electric vehicles (EVs).
The Honda 0 α (alpha) is meant to see production in 2027. Production will be in India, with sales primarily in India and Japan. Other markets will include the UK and other Asian markets. Honda did not provide any details on range, cost or battery chemistry.
The vehicle is designed for Indian road conditions and the lower range needs for both Indian and Japanese markets. It is aimed at first-time EV buyers, including first-time car buyers. Honda calls the Honda 0 α a “gateway” to the 0 Series EVs, which are being produced in the US in late 2026 and planned go on sale in Japan later.
The Honda 0 α uses a low vehicle height without affecting ground clearance, with a thin cabin and a promise of plenty of interior space. The exterior boasts screens in front and rear. In the rear, the screen is highlighted by U-shaped lighting that combines taillamps, backup lights, and turn signal indicators. In the front, components that are typically separated are integrated into the screen. The interior is still under wraps.
The Honda Super One is a prototype compact EV primarily for the Japanese market. Honda aims for this car to “transform everyday mobility into an exciting and uplifting experience.” The e: Dash BOOSTER mode increases power output (though Honda did not provide specifications). A simulated 7-speed transmission and active sound control mimic engine noise.
Mazda showed the Vision X-Coupe and Vision X-Compact concept vehicles, with the “X” in the name to be pronounced “cross.” Mazda’s theme for the year was “The joy of driving fuels a sustainable tomorrow” as the brand remains true to its spirit for delivering the joy of driving.
The concepts continue Mazda’s successful Kodo design philosophy. The midsize X-Coupe gets a two-rotor rotary-engine plug-in hybrid electric vehicle (PHEV) system. The company claims overall output of 510 PS, with driving range of 160km in EV-only mode and up to 800km in hybrid mode.
The PHEV has a system called Mazda Mobile Carbon Capture, which captures carbon from renewable fuels the engine uses. The system sequesters carbon emissions from the tailpipe and doesn’t release them.
The Vision X-Compact model, a small city car, is Mazda’s AI vehicle, “designed to deepen the bond between people and cars through the fusion of human sensory digital model and empathetic AI.” Mazda did not share powertrain information for the smaller X-Compact.
BYD, Hyundai and Kia are pushing for a foothold in the Japan auto market, and their auto show stands showed how.
BYD signaled it is taking on the Japanese Kei car market. Kei cars are a Japan-specific segment, designed for urban use, and limited in size and power. While BYD displayed a full model line, including its U9 super car, the Racco kei car is intriguing as an effort to gain ground in a uniquely Japanese segment. BYD offers the Atto 3, Dolphin, Seal and Sealion 7 in Japan currently, due to add the Sealion 6 and this new Racco.
Hyundai returned to the Japanese market in 2022, after a four-year hiatus caused by slow sales. The automaker showed the next-generation Nexo fuel-cell electric vehicle (a propulsion solution which enjoys a stronger infrastructure and more potential in Japan than most markets). Along with the Nexo, due for sales in Japan in the first half of 2026, Hyundai unveiled the Inster Cross and the Insteroid concept. The Inster Cross is a beefier version of the Inster EV already sold in Japan, while the Insteroid is a life-size version of a concept in the drift racing game JDM: Japanese Drift Master.
Kia is aiming at the EV market and showed cargo, passenger and wellness versions of the PV5 electric van, set to launch in Japan in 2026.
Along with these BYD, Hyundai and Kia increasing efforts to be relevant in the Japanese market, the US and Japan furthered trade talks, as President Trump visited Japan at the same time as the Tokyo motor show. While US automakers did not showcase news or concepts at the show, Japan has in theory agreed to allow US automakers to sell US-produced vehicles in Japan with US safety and regulatory requirements. It’s unclear how this will evolve, but if vehicles can be sold without market-specific modification, it could make the market more attractive for US automakers.
S&P Global Mobility projects the number of automakers in Japan will grow from 21 in 2020 to 31 in 2030. While new automakers plan to join the Japanese market, annual volume is not forecast to grow. Sales in 2024 slid to 4.3 million units from 4.5 million in 2020. By 2010, we see the Japanese light-vehicle market at about 4.2 million units.
The result is a challenging, highly competitive market. For a new entrant to succeed, they will need to take share from established, trusted companies. When a market is poised for organic growth, there is more opportunity for new brands to find success.
For new entrants to be successful, they will need innovative concepts and vehicles which are tailored to the nuances of the Japanese market and the evolving demands of those consumers. Events like the Japan Mobility Show give automakers an opportunity to explore if what they are planning hits the mark, before it is in production.
The S&P Global Mobility AutoIntelligence service provides daily analysis of global automotive news and events. We deliver timely context and impactful analysis for navigating the fast-moving industry.
This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.