The Japanese car industry is bracing for a decline to the domestic market and a knock-on drop to light vehicle assembly as incentives for eco sales in Japan end.
Analysts at PwC Autofacts say that Japanese domestic demand benefited from eco car cash incentives which boosted sales of small cars and hybrids. However, car sales are expected to slow as they expire at the end of the summer.
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PwC says that automakers are planning model introductions but that they will be faced with a reduction of Japanese sales as domestic incentives expire and domestic and export inventories are fully restocked in the near term.
PwC also says that the relative strength of the yen will remain an issue for Japanese automakers in terms of their Japanese operation. The forecasters say that Japanese light vehicle output will decline by nearly a million units between 2012 and 2018. Further capacity reduction in Japan is also forecast.
Japanese light vehicle assembly in 2011 is put at 7.9m units, the second lowest total in the past two decades in the wake of the earthquake and tsunami. Assembly volumes recovered in the first half of 2012. However, Autofacts is forecasting a drop in assembly to 4.1m units in H2 following 4.7m units assembled in the first half.
