April 2011

Small and Mini-Sized Truck Market Trends Summary of Results of JAMA's Fiscal 2010 Survey

The Japan Automobile Manufacturers Association has released the results of its small and mini-sized truck market survey conducted in fiscal 2010 (ending March 31, 2011).

This survey is conducted once every two years to monitor shifts in the demand structure for small and mini-sized trucks by tracking periods of ownership, purchases, and patterns of use. Also investigated in this survey were the impact on users of new or revised laws and ordinances pertaining to motor vehicles and changes in the use environment affecting trucks in this market segment.

The fiscal 2010 survey specifically sought to determine the extent of:
(1)The impact on demand of the global recession-induced economic downturn and of Japan’s tax incentives and subsidies for the purchase of eco-friendly vehicles;
(2) Small and mini-sized truck use in corporate operations;
(3) Awareness of environmental issues;
(4) Trends in use by farming households; and
(5) Changes in expressway use patterns.

Survey results highlighted the following trends:

A widespread anticipation of increased business activity and freight movements, accompanied by an upturn in business sentiment.
Notwithstanding a continuing decline in the numbers of small and mini-sized trucks in use, a spike in demand for these vehicles in response to the government’s tax incentives and subsidies for eco-friendly vehicle purchases.
Declines in vehicle operation/ownership rates as a consequence of the deteriorating business climate and slump in freight volumes resulting from the global recession.
No major changes in use patterns by truck type (small/mini), but the ratio of mini-truck to small truck use is rising, reflecting efforts to streamline freight transport operations as much as possible.
Near-term replacement purchasing plans indicate strong inclinations to stay with the same model choices; further down the road, corporate operators owning multiple types/models expect to streamline their operations by either reducing unit ownership or expanding their mini-truck fleets.
High levels of concern, especially among freight carriers, over environmental issues, although effectively addressing those issues may be difficult because of deteriorating business conditions; despite the positive image of next-generation alternative-energy commercial vehicles, concerns over their driving range and refuelling infrastructure.
Although farming households continue to decline in number, a shift towards larger-scale farming operations and expanded ownership of small trucks.
About 30% of freight carriers and wholesalers—most of them small-truck owners—use expressways at least once a month.

Reference

JAMA’s Fiscal 2010 Survey of
Small and Mini-Sized Truck Market Trends
Survey Implementation Outline and Results

1. Survey Implementation Outline

Survey scope	Individual users	Corporate operations
Survey area	Nationwide	Within a 50-km radius of metropolitan Tokyo / Within a 30-km radius of Osaka or Nagoya
Survey targets	Owners of small and mini-sized trucks for individual use	Commercial enterprises with five or more employees
Valid responses	1,575	689
Survey period	August 16- September 27, 2010	August 16- September 27, 2010

2. Survey Results

2.1 Current and projected business conditions: A widespread anticipation of increased business activity and freight movements, accompanied by an upturn in business sentiment.

Amid the economic downturn triggered by the global financial crisis in late 2008, corporate business conditions deteriorated over the ensuing two years. However, with the exception of freight carriers, more corporate respondents than in the 2008 survey said they expected business activity and overall sentiment to pick up in the near future.
Despite low business confidence among freight carriers, carrier-hiring corporate respondents projected increases in freight volumes in the near term.

2.2 Demand status: Notwithstanding a continuing decline in the numbers of small and mini-sized trucks in use, a spike in demand for these vehicles in response to the government’s tax incentives and subsidies for eco-friendly vehicle purchases.

Sales of small and mini-sized trucks dipped sharply in 2009 amid the economic downturn, but bounced back in 2010 as a result of the government’s introduction of tax cuts and subsidies for the purchase of eco-friendly vehicles. Nevertheless, the number of in-use models, for both small and mini-sized trucks, continues to decline.
Replacement purchasing trends revealed no significant shift in truck type and model choices. However, a greater number of respondents than in the 2008 survey reported having downsized from small to mini-sized trucks. Meanwhile, longer periods of ownership of individual vehicles may have acted to suppress demand.

2.3 Ownership trends and related factors: Declines in vehicle operation/ownership rates as a consequence of the deteriorating business climate and slump in freight volumes resulting from the global recession.
A. Trends in ownership

Reduced freight volumes amid a deteriorating economic environment resulted in a lower average corporate rate of ownership (in units) in this market segment than the rate recorded in the 2008 survey, with a particularly marked decline among companies owning large truck fleets.
In terms of truck types (small/mini) owned, a slight shift to mini-trucks (including commercial minivans) was registered.

B. Factors behind trends in ownership

Fluctuations in total freight volumes are considered the major factor behind fluctuations in ownership rates (in units). Indeed, as a result of the drop in freight volumes handled amid the economic downturn triggered by the global financial crisis, vehicle operation rates declined. This trend was particularly strong among freight carriers and truck-owning enterprises in the construction and manufacturing sectors, with, notably, small-scale operators in those sectors reporting difficulties in being able to respond flexibly to freight transport requirements, leading to declines in vehicle operation rates.
Although further rationalization in freight transport operations is viewed as largely unfeasible, greater efforts are nevertheless being made to increase vehicle operation rates and delay vehicle replacement purchases.
Despite a continuing trend to outsource freight-transport operations, some enterprises reported actual reductions, or the intention to achieve reductions, in outsourcing activities in view of the slump in freight volumes.

2.4 Use patterns, with, increasingly, more selective vehicle use: No major changes in use patterns by truck type (small/mini), but the ratio of mini-truck to small truck use is rising, reflecting efforts to streamline freight transport operations as much as possible.

No major changes were tracked in patterns of small truck and mini-truck use.
Nevertheless, corporate operators with large vehicle fleets and a greater mix of types and models within those fleets—most notably, enterprises in the construction and manufacturing sectors with high rates of in-house freight movements—are using their trucks more selectively, in a streamlining effort to meet actual freight transport needs more efficiently.

2.5 Replacement purchasing plans and projections for changes in future ownership patterns: Near-term replacement purchasing plans indicate strong inclinations to stay with the same model choices; further down the road, corporate operators owning multiple types/models expect to streamline their operations by either reducing unit ownership or expanding their mini-truck fleets.
A. Next vehicle replacement purchasing plans

Most respondents indicated their intention to stay with the same model choice(s) for their next vehicle replacement purchase(s), with many small- truck owners noting their desire not to switch to mini-trucks or commercial minivans.
Among owners of small trucks, a slight preference for larger-model replacement purchases was noted; similarly, current owners of commercial minivans indicated an inclination to shift to small trucks.

B. Projections for future ownership patterns

Compared to the results of the 2008 survey (whose conduct coincided with the emergence of the global financial crisis), there was a significant decline in the percentage of respondents projecting drops in ownership levels (in units). The majority of respondents anticipated a growing share for mini-trucks.
However, projections of a declinein future business conditions and in freight volumes were striking, with corporate operators owning multiple types/models anticipating a need to streamline their operations by either reducing unit ownership or expanding their mini-truck fleets.

2.6 Awareness of environmental issues: High levels of concern, especially among freight carriers, over environmental issues, although effectively addressing those issues may be difficult because of deteriorating business conditions; despite the positive image of next-generation alternative-energy commercial vehicles, concerns over their driving range and refuelling infrastructure.
A. Extent of awareness

Among the freight-carrier respondents, concern over the environment was, at over 90%, particularly high—even higher than the rate recorded in the 2008 survey. In other sectors, a growing percentage of operators expressed concern over the potential cost burden of adopting environmental measures, in view of the deteriorating business climate.
Also underscoring an expanding awareness of environmental issues, more respondents than in 2008 affirmed their intention to opt for vehicles with excellent durability (in the interest of extended serviceability), while reducing the number of units owned and the frequency of vehicle use.

B. Awareness of next-generation alternative-energy vehicles, related concerns

Survey respondents noted their heightened awareness of the environmental benefits of electric, hybrid and other next-generation alternative-energy commercial vehicles, such as “little or no exhaust emissions,” “excellent reputation and image,” and “exceptionally quiet ride.” However, potentially high market prices were a principal concern with respect to these vehicles. For electric vehicles in particular, concerns were expressed mainly with respect to their driving range and refuelling infrastructure.

2.7 Trends in small and mini-sized truck use by farming households: Although farming households continue to decline in number, a shift towards larger-scale farming operations and expanded ownership of small trucks.

While the number of farming households nationwide continues to decline, there are moves among younger farmers to expand the scale and concentrate the scope of their farming operations.
Though the survey revealed little change in mini-truck ownership patterns, a growing rate of small-truck ownership was recorded.

2.8 Changes in expressway use patterns: About 30% of freight carriers and wholesalers—most of them small-truck owners—use expressways at least once a month.

Among respondents using trucks/minivans for commercial purposes, about 30% reported using expressways at least once a month; of those, 50% indicated that their per-trip expressway travel distance did not exceed 50 km.
Frequency of expressway use was highest among freight carriers and wholesalers, and low among operators in the retail and service sectors.
Expressway use is more common among small-truck users than mini-truck/minivan users. Measured by both frequency and distance, mini-truck expressway use is, comparatively, not very significant.
High-frequency short-distance expressway use patterns prevailed among users in urban areas, while a large number of respondents from regional areas reported an increase in the frequency of their expressway use following the government’s introduction of expressway toll discounts.

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