Across the world, the Honda Civic is an unstoppable force, so why is it ignored in Japan?

• Honda Civic is USA's No.1 selling car for 6 years, No.1 in segment for 12 years
• Civic is No.1 C-segment in Malaysia since 2016
• But Civic sells poorly in Japan, Toyota Alphard sells 17x more despite higher price

Generally speaking, a lower priced mass market car will sell in greater quantities than a high-end luxury model. The exception to this is in Japan, where more people buy a Toyota Alphard than a Toyota Sienta, or the subject of this topic, the Honda Civic.

For every one Honda Civic sold in Japan, 17 units of Toyota Alphards are sold.

This is in sharp contrast with the Civic’s dominant position elsewhere. The Honda Civic has been USA’s best-selling passenger car for the last 6 years. It's  also the best-selling C-segment model there for the last 12 years.

Its dominance in our part of the world needs no further introduction. Not even the fleet of Toyota Corolla Altis taxis in Thailand can match the Civic’s sales in South East Asia.

Also read: 2020 Honda Civic dominates Thai sales - outsells Corolla Altis, Mazda 3 and Sylphy combined!

For a casual observer living outside of Japan, the Civic's poor sales in its home market is quite perplexing.

Honda in Japan sells 10x more Freed than Civic

Japan might be a powerhouse for the automotive industry but in many ways, Japan is also a rather anti-car society.

The combination of expensive real estate, limited parking space, congested cities, heavy reliance on imported oil for fuel mean that the Japanese government’s public policy is aimed at penalizing private car ownership while encouraging use of public transport.

Most Japanese city dwellers stay in high rise buildings, often with limited or no parking for cars. Free overnight parking is very rare, even in sub-urban areas.

If they do own a car, many have to pay for overnight parking at a nearby parking facility. City councils in earthquake-prone Japan are also not keen on elaborate underground / above-ground multi-storey car parks, so mechanized car stackers are preferred. This is also why battery EVs won't gain traction in Japan, because overnight charging is just not possible in such an environment, but that's another story.

There’s also the costly but mandatory vehicle inspection (Shaken), which becomes very expensive after the fifth year.

New car buyers must also pay for the recycling cost of the car as well as a one-time parking tax of sorts to the local city council (exempted for kei minicars) before they can even stick a license plate on their new ride.

The ones who live in a landed property in the suburbs will have space for only one car, so if a Japanese family is to buy a car, it has to be a car that can do everything, which typically means a sliding door minivan, for easy entry / exit in tight parking spaces.

Also read: Poor door choices are what killed off the Toyota Wish and Honda Stream

This is why in the first quarter of 2022, Honda delivered 20,692 units of Honda Freed, versus less than 2,000 units of the Honda Civic. In other words, Honda sells 10x as many Freed as the Civic.

While the Honda Freed did not survive beyond just one generation in our region, it's a success story for Honda in Japan, ticking all the right boxes, doing everything that Japanese families expect from their cars.

More importantly, the Honda Freed is 30 percent cheaper than the Civic!

So how is the Toyota Corolla doing? That’s a bit hard to tell because Toyota reports its Corolla sales by grouping all Corolla derivative models (6 in total), including the Corolla Cross, Euro-style Corolla Sport hatchback, Corolla Sedan, Corolla Touring, as well as the fleet-sales Japan-only Corolla Axio and Corolla Fielder as one – 133,420 units in Q1 2022, majority of it contributed by the Corolla Cross.

Also read: Over 13,000 orders for Toyota Corolla Cross in Japan within 1 month, 3x monthly sales target

Honda in Japan is defined by the N-Box, not the Civic

Outside of Japan, Honda is defined by cars like the Civic, Accord, CR-V, and in our part of the world, the City – thus making Honda a close rival of Toyota.

But in Japan, Honda competes more with Daihatsu and Suzuki in the kei minicar segment, than with Toyota.

One in every 3 new car sold in Japan is a kei minicar and the Honda N-Box, a kei minivan with sliding doors has been Japan’s No.1 selling car for the last 6 years.

In the first quarter of 2022, Honda sold 64,178 units of the N-Box. Its next closest rival, the Daihatsu Tanto, is far behind with 26,936 units.

For Japanese consumers, Honda = N-Box = kei minicar. The Civic is an almost forgotten nameplate.

The Honda Civic is very expensive in Japan, costing way more than a Toyota Corolla.

In Japan, Honda only sells the Civic hatchback, produced locally at the Yorii plant. Prices start from JPY 3.19 million. For context, a Toyota Alphard costs just 23 percent more, starting from JPY 3.94 million.

The similar segment Toyota Corolla Sport starts at just JPY 2.17 million, topping out at JPY 2.56 million. Of course, the Corolla Sport lacks the Civic’s VTEC Turbo punch. Instead, the Toyota is powered by a 1.8-liter hybrid that’s shared with the Prius.

But this is Japan, where the 100 km/h speed limit (120 km/h only on very small sections) is strictly enforced and street racing exists only in animes and mangas. How fast do you think you can go before your license gets revoked?

For the same price as a Honda Civic, a Japanese buyer can buy a Corolla Sport hybrid and still have change left for a Daihatsu Mira e:S. Only the most ardent fans of the Civic will put money down on one, which explains its low sales there.

Also read: The Daihatsu Mira Gino wasn’t inspired by the original Mini, but something Italian

Honda Civic as example of Japan’s Galapagos syndrome

Technically, Japan is an open market and a key member of the World Trade Organization, with free-trade agreements with many major economic powers.

In reality however, Japan exists on a parallel but separate universe from everyone else.

Its consumer habits and market demands are just too different from the rest of the world, making it very difficult even for Japanese manufacturers to offer a single product that can satisfy the domestic market and still be competitive enough for exports.

Likewise for foreign businesses trying to penetrate Japan. The only exception to this rule are premium products sold by very high equity luxury brands, like a Mercedes-Benz G-Class (Japan’s best-selling Mercedes model).

Also read: Forget C-Class, the G-Glass was Mercedes-Benz’s best-selling model in Japan in 2021

A Honda Civic which is well received in USA and the rest of Asia just won’t cut it in Japan.

It's same thing for consumer electronics too. For decades, Japanese laptops sold domestically have screens that are taller rather than wider like international market ones, to fit smaller Japanese office desks.

For more than a decade before the iPhone was introduced, Japan’s DoCoMo flip phones were already equipped with Internet browsing capabilities and high resolution cameras, but these smartphones couldn’t be sold elsewhere because they just won’t work on overseas cellular networks.

Likewise for Japan’s highly-advanced in-car navigation system, which in the ‘90s was already giving real-time traffic information like today’s Waze / Google Maps. Again, reliance on domestic data communication protocols mean that the hardware has zero value outside of Japan.

Business circles refer to this phenomenon as the Galapagos syndrome, named after the isolated Pacific island used by Charles Darwin for his research on evolutionary science.

Like Japan, creatures on the Galapagos Island evolved in isolation from the outside world. The sharp contrast in success of the N-Box and Civic in Japan vs overseas markets is an example of Japan’s Galapagos syndrome.

The Honda Civic, whose fame rose in ‘80s era Japan, made popular there by the Civic one-make race series in Suzuka and Japan’s kanjozoku sub-culture of the ‘90s, before catching the attention of American tuners, has now been reduced to an anecdotal evidence of Japan’s Galapagos syndrome.

Well, Japan’s loss is our gain, because we certainly don’t want to trade the Civic for a Freed (but we won’t mind the fantastically practical Honda StepWGN).

Also read: Pros and Cons: 2022 Honda Civic – drives like a front-wheel drive BMW, better interior than a Mazda