Japan's New Car Sales Slump in January 2011

New vehicle sales in Japan have slumped in January 2011 by 21.5% compared with the same period last year. This applies only to regular cars, and not to the smaller kei city cars which are not included in these statistics. The difference for new passenger cars was even more pronounced with sales dropping by 23.8% over the same time one year ago. This brings new vehicle sales down to a level last seen in 1978, and 40% down from the record achieved in 1997.

Some of the drop in sales can be attributed to the expiration of the “Eco car” incentive scheme, which pushed Toyota’s Prius to the top of the sales chart for much of 2010. In this regard the latest year-on-year drop of 21.5% is less than the November drop of 30.7% and the 28.3% figure for December. So although new car sales are down on the same period last year, the precipitous decline caused by the expiration of the “Eco car” incentive scheme in October seems to be gradually disappearing. However, commentators are saying that it seems that the bottom of the market has not yet been reached.

In terms of individual manufacturers, it has been Toyota that has been hardest hit with a drop of 27.7% over the previous year. On the other hand, it was Toyota with its Prius model who gained most from the “Eco car” incentives, so this sudden fall of in sales seems to be more about the market righting itself after a period in which demand was distorted by this government incentive.

Since the car auctions in Japan are dependent on a flow of trade-ins caused by new car sales, we are hoping for a quick recovery for the new car market, although without another distorting “Eco car” scheme that would also pull used vehicles out of the system.

(Source: Reuters – Japanese language)