Japan's new vehicle market continued to shrink in March 2020, by 9.2% to 581,438 units from 640,813 units a year earlier, according to registration data released by the Japan Automobile Manufacturers Association.

The market had been in decline since the government hiked the general sales tax rate from 8% to 10% at the beginning of October last year.

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This had a significant impact on fourth quarter domestic consumption after businesses and consumers pulled purchases forward ahead of the tax hikes.

Vehicle sales declined by 16.3% to 1,045,531 units in the final three months of last year, resulting in a 1.5% drop in full year sales to 5,195,216 units.

The COVID19 coronavirus is also beginning to have a significant impact on consumer and business activity in Japan with the government set to implement a state of emergency in several major cities including Tokyo to help slow the spread of the virus.

Major automakers in the country have also cut back production to adjust for lower global demand.

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Vehicle sales in the first quarter of 2020 were down by just over 10% at 1,371,726 units compared with 1,528,215 units a year earlier. Passenger car sales fell by 10.0% to 1,148,454 units, while truck sales were down by 11.4% at 219,162 units and bus sales declined by just 8.3% to 4,110 units. 

Toyota was the best performing major brand in the market in the first quarter, with sales falling by just 4.4% to 407,171 units while second placed Honda reported a 15.1% decline to 187,113 units; Suzuki 187,371 units (-11.2%); Daihatsu 173,482 (-10.0%); Nissan 153,131 units (-17.8%); and Mazda 63,543 units (-11.8%).

While the domestic market decline so far this year can be seen as moderate compared with what is happening in North America and Europe, sharper declines are expected from April onwards as more restrictions are imposed on business and consumer activity in the country.