Best of Times, Worst of Times: How K-shaped polarization is reshaping Japan‘s auto market

Research evidence excerpt

Best of Times, Worst of Times: How K-shaped polarization is reshaping Japan‘s auto market

25 June 2026

Japan Autos & Auto Parts

Best of Times, Worst of Times: How K-shaped polarization is

reshaping Japan's auto market

“It was the best of times, it was the worst of times”. The famous opening line of Charles Masahiro Akita

+81 3 6777 6998 Dickens’ ‘A Tale of Two Cities’ captures a period of contradiction: the French aristocracy

masahiro.akita@bernsteinsg.com indulging in opulence and privilege, the peasantry experiencing poverty and oppression.

While 2026 is thankfully not 18th century France, shifting class dynamics remain more

Seunghyeok Kim topical than ever, from the US K-shaped economy to the squeezed Chinese middle class.

+81 3 6777 6974

seunghyeok.kim@bernsteinsg.com In this note, we examine how K-shaped polarization is reshaping Japan’s auto market,

weakening affordability, and changing automakers’ competitive positioning.

Tomohiro Kashimoto

+81 3 6777 6975 K-shaped polarization is reshaping Japan’s auto market: Demand in Japan’s auto

tomohiro.kashimoto@bernsteinsg.com market is becoming polarized between low-end and high-end vehicles. Between 2015

and 2025, monthly new car purchase spending per household declined as much as 22%

among lower-income households, while increasing as much as 32% among higher-income

households. Car ownership also became more polarized, with the ownership rate gap

between lower-income and higher-income households widening from 27%p to 30%p.

Polarization is also visible in currently owned vehicle prices. The share of low-end vehicles

priced below JPY 1 mn increased from 1% in 2017 to 6% in 2025, while the share of high-

end vehicles priced above JPY 5 mn rose from 6% to 15%. In contrast, the share of vehicles