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Car sharing, 'subscriptions' expand in Japan as vehicle ownership loses its shine

Vehicles are seen lined up at a Park 24 Co. car-share station in this photo provided by the company.

TOKYO -- Once upon a time, having a car was a status symbol. But in Japan, young people in particular are leaving car ownership behind, forcing the country's automakers to seek and strengthen strategies beyond the simple dealership sale. Now, a host of alternative ways to get behind the wheel are popping up, especially in cities, from fixed fee vehicle "subscriptions" to car sharing.

    "I want to change this decades-old idea that a car is something you buy." So said Shinya Kotera, president of Toyota Motor Corp. subsidiary Kinto Corp. during an online briefing on the company's Kinto One service in January this year.

    Kinto was launched in March 2019, and offers three-, five-, and seven-year vehicle "subscriptions." The customer can use the car as though it was their own, while it legally belongs to Kinto. There is no down payment or vehicle inspection fee, while insurance, registration, maintenance and other costs associated with traditional car ownership are all covered by the fixed monthly subscription fee. Applications and contracts can all be handled over the internet.

    A section of a car dealer promoting the Kinto One "subscription" service is seen in Fukuoka's Hakata Ward on Mach 25, 2021. (Mainichi/Hiroshi Hisano)

    For example, the popular Yaris compact has a list price of 1.62 million yen (just under $14,700). According to the company's estimates, the total cost of buying and owning a Yaris -- including insurance, registration and other fees -- would hit 1.98 million yen (roughly $18,000) over three years, even after factoring in the car's trade-in value. That comes out to an average cost of 55,235 yen (about $500) per month. Kinto offers the Yaris for 39,930 yen (approx. $360) per month.

    Kinto's target market is young people who have never purchased a car before. But the firm also has plans that waive contract cancellation penalties for elderly customers who voluntarily return their driver's licenses. Its expanding lineup now boasts more than 30 models, and it reached 12,300 contract applications in December 2020.

    Nissan Motor Co. and Honda Motor Co. have also launched fixed fee subscription services, while Idom Inc., which runs the used vehicle dealer chain Gulliver, has introduced a plan that allows customers to switch vehicles monthly. One woman in her 40s in Fukuoka Prefecture told the Mainichi Shimbun, "My husband and I have two cars, but we made one of them a subscription vehicle." Subscription car drivers are also growing more common in regional Japan.

    Meanwhile, demand for rentals and car sharing to meet specific needs is also expanding. According to the All Japan Rent-a-car Association, there were some 440,000 rental cars in the country in 2010. By 2020, there were about 920,000. Furthermore, a study by the Foundation for Promoting Personal Mobility and Ecological Transportation showed that the number of car-share vehicles rose from 1,300 in 2010 to approximately 40,000 in 2020.

    Both car-share cars and rentals are available for a short time for a fee. However, while rentals are available from storefronts, car-sharing generally works on a membership system. After making an online reservation, a member can pick up the vehicle from their nearest designated station, which operate around the clock. For example, under Park 24 Co.'s Times Car vehicle sharing service, gasoline, insurance and other costs are all included in the price, which starts at 220 yen (about $2) per hour. And Times Car stations have been multiplying, primarily in urban areas.

    One factor behind the growth in subscription and car sharing services is that young people are increasingly spurning owning a car. This trend has sped up since the 1990s, when Japan's economic malaise set in, while young people today have many more ways to amuse themselves than driving. Domestic vehicle sales peaked in 1990 at about 7.77 million. In recent years, annual sales have hovered around 5 million vehicles.

    According to certified financial planner Tomoko Shirahama, the strength of subscription services is that, "for people who spend only a few percent of their monthly active hours driving, it's more economical to lease a car based on their needs than to buy one." Furthermore, for those who only need a car now to pop out for shopping or pick someone up, car sharing services are very convenient. For longer trips, rentals are available.

    "It's really case by case, depending on the person and their driving needs," she said.

    And so we enter an era of diversifying ways to get behind the wheel, whether it be buying, renting or "subscribing" to a car. And the choices people make will be shaped by their lifestyles, how often they drive, their age and other factors.

    (Japanese original by Hiroshi Hisano, Kyushu Business News Department)

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