Japan has long been known for its strong automaking industry. However, in recent years, it has come to dominate the global hybrid vehicle market, demonstrating that it can evolve to be competitive as the demand for electric vehicles (EVs) continues to rise. While several other countries, such as China, are also increasing their hybrid output, many markets continue to opt for Japanese models due to their solid reputation for traditional automaking and the inclusion of innovative technologies in new hybrid models.
In India, Japanese hybrid vehicles are becoming increasingly popular among consumers looking to switch to green, but with the convenience of the petrol option. The demand for EVs and hybrids in India has risen sharply in recent years, as the country’s middle class has expanded and the government has put increasing pressure on companies to decarbonize.
India’s EV market is forecast to grow at a compound annual growth rate (CAGR) of 19 percent, to $17.8 billion by 2032. This reflects the cultural shift taking place in India and the wider South Asian region. Hybrid cars are expected to comprise around 10 percent of India’s total car sales in the year leading up to March 2027, while EVs will account for around 5 percent of sales. Hybrid vehicle sales rose by around fourfold between 2020 and 2026, from 98,010 units to 362,866 units.
The senior automotives analyst at Omdia, Diwakar Murugan, explained, “It’s clear that hybrid cars are gaining traction [in India] faster than EVs in the passenger car segment.” Murugan added that it was “remarkable” that hybrids are performing so strongly, given that there are just eight models on the market, compared to over 40 EV models.
While major global players, such as Tesla and BYD, initially dominated the Indian EV market, many consumers are now turning to Japanese brands that they already know and love for their internal combustion engine (ICE) models for their new range of hybrid models. Japan’s Toyota and Maruti Suzuki – the Indian subsidiary of Suzuki Motor- are the leading manufacturers in India, becoming popular with models such as the Toyota Innova Hycross and Maruti Grand Vitara.
Japanese ICE vehicles have long been popular in the Indian market, with many consumers already familiar with the major brands. Between March 2025 and 2026, Maruti Suzuki sold 1.8 million cars in the Indian market, including 20,466 hybrids, according to the Society of Indian Automobile Manufacturers. Meanwhile, the Japanese Indian joint venture Toyota Kirloskar Motors sold a reported 91,536 hybrid vehicles, out of a total of 366,896 cars over the same period.
Indian consumers have been attracted to hybrid vehicles, and many look to switch to green and reduce fuel costs without entirely changing their driving habits. The great thing about a hybrid vehicle is that it can be fuelled using petrol as needed, but can also run on electricity, which can help reduce fuel costs. In addition to new models from Maruti Suzuki, Japan’s Honda is also planning to launch new hybrid models in India this year.
Several other global markets have been attracted by Japan’s hybrid models over other Asian car brands. In South Africa, Japan’s Toyota dominated the hybrid market in 2024. A total of 12,818 hybrid vehicles were sold in South Africa in 2025, with Toyota holding a 71 percent share.
In Japan, hybrid sales have risen sharply in recent years, reaching 2.04 million units in 2024. This figure is expected to increase at a CAGR of 11 percent to reach 3.84 million units by 2030. The domestic market is dominated by some of Japan’s most well-known automakers, including Toyota, Honda, Mitsubishi, and Nissan.
These brands have spent decades establishing a strong reputation for automaking, and they are now offering hybrid models equipped with innovative technology that combines efficiency, performance, and reliability. Many Japanese consumers also favour the more compact, urban-friendly vehicles that these brands offer. This varies from U.S. automakers, such as Tesla and Ford, which are focusing more heavily on larger vehicles.
However, China is hot on Japan’s tail when it comes to hybrid vehicle development. While many Chinese companies are focusing on the EV market, some producers are now developing hybrid models that compete with Japan’s top performers, in a bid to win a larger market share in countries such as India and South Africa.
Chinese automakers are doing this by working to rapidly improve hybrid technologies to make them more competitive. This year, China’s Geely revealed two new hybrid models, which the company says have a fuel efficiency of 2.22 litres per 100 km, which is around 12 percent better than the flagship Toyota Prius hybrid. This suggests that Japanese automakers will need to continue innovating to ensure they can maintain their hybrid market dominance in the coming years, particularly as more consumers switch to electric vehicles.
By Felicity Bradstock for Oilprice.com
