Japanese Car Sharing Market: Preparing for Carbon Neutrality by 2050

Japan is famous for its bullet trains, spotless metros, and one of the world’s most efficient public transport systems. But here’s something you might not expect: it also has one of the most mature car sharing markets globally.

According to the Yano Research Institute, Japan’s car sharing industry is projected to reach nearly USD 800 million and serve more than 2.7 million users by 2029.

Leading the market is Times Car, with an impressive fleet of over 50,000 vehicles. As Japan pushes toward carbon neutrality by 2050, car sharing is emerging as a practical, tech-driven middle ground. It offers flexibility without ownership and an opportunity to reshape mobility in one of the most transit-connected countries in the world.

In this article, we explore how Japan’s car sharing market is evolving, with insights from Tomo Shimada, a shared mobility expert and former Head of Brand Reputation Marketing at Uber in Japan. From urban convenience to EV readiness, here’s what’s driving change – and where it’s headed next.

Car Sharing in Japan: History and Current Landscape

A Country Built on Trains

Japan has one of the most developed public transport systems in the world. The railway system has covered the country for over 150 years, making it the backbone of today’s mobility landscape. This network collectively transports over 25 billion passengers per year. “There is literally no city in Japan that is not accessible by rail,” says Tomo Shimada, Shared Mobility Expert from Tokyo.

An Aging Population

Japan’s population is aging rapidly. As of 2023, 124.4 million people live in Japan, and more than 81.8 million of them (over 66%) hold a driver’s license. But holding a license doesn’t always mean using it. In recent years, many elderly drivers have voluntarily surrendered their licenses for safety reasons. The government actively supports this with incentives and programs like discounted taxi rides and free public transport passes.

Even younger drivers are rethinking ownership due to high costs and excellent transit options. The result? Fewer people drive regularly despite being licensed, creating space for flexible, shared-use alternatives.

Self-Driving Tourism: A Quiet but Growing Trend

Self-driving tours have long been a favored way to explore Japan’s more scenic or rural regions. Areas like Hokkaido, Okinawa, and Kyushu are especially popular for road trips. And it’s not just tourists from abroad. While international visitors rent cars for countryside exploration, most self-driving travelers in Japan are locals. This demand for occasional access to a vehicle, without the burden of ownership, is one of the many forces nudging the country toward more flexible mobility options like car sharing.

The Taxi Industry’s Highs – and Lows

Taxis have long been a core part of Japan’s transportation mix, especially for short and late-night travel. However, the industry has declined since 2019. The number of licensed taxi drivers has dropped by more than 20%, and the average age of drivers now hovers around 60. The COVID-19 pandemic accelerated the downturn, and in 2024, a record 82 taxi companies went bankrupt – driven primarily due to driver shortages and rising fuel costs.

Although taxis still served nearly a billion passengers in 2023, supply often falls short, especially during peak hours or in rural areas. As the industry contracts, car sharing is stepping in to fill the mobility gap.

The Rise of Car Sharing

What started as a handful of pilot projects in the 1990s rapidly expanded in the 2000s and 2010s with the rise of smartphones, which enabled easy booking, keyless access, and app-based billing. Today, car sharing is firmly embedded in the Japanese mobility ecosystem.

Japan’s car sharing market is expected to consist of over 65,000 vehicles and is primarily station-based. A model that is well-suited to Japan’s high-density urban environment. Operators often partner with parking providers to place cars near transit hubs, apartments, and commercial centers, making car sharing a natural extension of daily mobility.

But the development goes even further, as Tomo notes: “The focus shifts to integrated transport solutions, bringing different transport modes together. Car sharing services try to leverage this trend by exploring partnerships with other mobility providers to play a crucial role in Japan’s transport future.”

Major Players for Car Sharing in Japan

According to Carsharing360, around 30 operators in Japan offer car sharing services. While OEMs like Toyota, Honda, and Nissan have launched their car sharing services as extensions of their rental business, the market is dominated by a few key players:

1. Times Car Share: Market leader with more than 50,000 vehicles and widespread nationwide use. Operated by Park24 Group, which also owns Times Parking, Times Car Share benefits from extensive accessibility and parking. Operating for more than 15 years, they focus on a wide range of vehicles, including compact cars, SUVs and even some luxury models.
2. Mitsui Car Share (previously known as “Careco”): Mitsui has a fleet of around 8,000 vehicles, with an increasing focus on electric vehicles. Operated by the real estate company Mitsui Fudosan, Mitsui is building stations not only in car parks, but also in apartment complexes, shopping centers and hotels. They started their service in 2009 and now offer more than 60 different vehicle models, most of them SUVs.
3. Orix Car Share: Third largest operator with a fleet of 2,500 vehicles. Founded in 2002 and rebranded 2010 to Orix CarShare, it is one of the first operators in Japan. Orix offers competitive pricing and a variety of vehicle options and has a strong presence in metropolitan areas. They even provide one-way services in select regions like Aizu-Wakamatsu.

Also worth noting is d car share, an aggregator platform by local telecommunications provider NTT Docomo. It integrates various car sharing and rental services into one app to further enhance convenience and user reach.

Key Driving Factors of Car Sharing in Japan

Several key factors are fueling the growth of car sharing in Japan:

A Practical Alternative to Car Ownership

Even in one of the world’s leading public transport systems, using the metro or bus is not for everyone, as Tomo explains. “For young families with one or two children, public transport can be inconvenient.” Car sharing fills the gap for occasional, mid- to long-distance trips. Sharing a car is also more affordable than owning. “Many car sharing users don’t have the financial resources to purchase a car, or don’t see car ownership as a status symbol, but still need access to a car. That’s why sharing is their preferred choice.”

Variety of Local Cars

From compact city cars (e.g. Toyota Prius) to SUVs (e.g. Mazda CX-5) and sports cars (e.g. Mazda Roadster) – Japanese car sharing operators offer a wide range of different vehicle models. Most of them are supplied by domestic car manufacturers, which also provide kei cars to the car sharing fleets. These small, ultra-efficient vehicles are ideal for city driving and tight parking.

Technology-First Culture

From cashless payments to vending machines, Japan is a tech-savvy society. Car sharing fits right in, making it a popular mode of transport. Operators also leverage AI and telematics to manage fleets efficiently and gather insights on vehicle usage:

• IoT and Telematics: Real-time tracking, remote diagnostics, and fleet optimization
• AI-Powered Damage Detection: Used to spot dents, scratches, and even smoke residue
• Driving Behavior Analysis: Monitoring speed, braking, and acceleration to improve safety
• AI Chatbots: Handling customer service questions quickly and cost-effectively

Challenges Japanese Car Sharing Operators Face

Parking

Similar to the Taiwanese Car Sharing Market, parking is a major challenge for operators in Japan and parking costs are very high. In highly dense areas of larger cities, parking lots are few and far between. Operators tackle this challenge by partnering with parking services. Times Car for example has its own subsidiary called Times Parking, that provides parking spaces in relevant areas.

Transit Competition

Public transport is so efficient that car sharing must work hard to complement it – not compete. Use cases like shopping trips, weekend getaways, traveling with children, or late-night errands are key areas of opportunity.

Rural Expansion

Outside the cities, demand is lower and behavior is harder to shift. Locals are more likely to drive their own cars or opt for traditional rentals. Operators must tailor their approach to local needs.

EV Adoption: A Critical Piece of Japan’s Net-Zero Puzzle

Passenger cars account for nearly half of transportation-related CO₂ emissions in Japan. Yet, EV adoption among private consumers and car sharing operators remains under 2 % – well behind Europe.

Committed to carbon neutrality by 2050, the Japanese government is responding with incentives and subsidies. Unlike free-floating, station-based car sharing fleets are in a strong position to lead the transition. Tomo emphasizes: “Because all vehicles need to return to fixed locations, operators can install charging stations and scale their EV offerings without disrupting operations.”
 

What’s Next for the Japanese Car Sharing Industry?

The success of the recent years gives car sharing operators a promising outlook for the future. It is expected that the total fleet size will further increase within the next years, while also spreading out in rural areas. The future may also include autonomous vehicles, as Nissan already started their first test drives with autonomous driving in Yokohama.

Tomo sees that the government promoting sustainable transportation options as a major player to reduce traffic congestion and carbon emissions. “As part of a larger smart city strategy, integration of car sharing with other shared mobility solutions and public transport offers the Japanese transportation network a huge potential for further market growth and a realistic chance to achieve carbon neutrality by 2050.”

Navigating Toward a Shared Future

The Japanese car sharing market isn’t just mature – it’s a model for how flexible, tech-enabled mobility can thrive even in the shadow of world-class public transit. From shrinking taxi fleets to shifting cultural norms around private car ownership, the conditions are right for significant growth. 

For operators, suppliers, and urban planners watching the evolution of global mobility, Japan offers a clear message: where infrastructure is strong and ownership is declining, car sharing has room to grow.