New model launches helped vehicle sales in Japan grow slightly in the business year to the end of March, but industry watchers said demand was likely to stay at low levels until a meaningful economic recovery took hold, Reuters reported.
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According to the news agency, vehicle sales in Japan, including the cheaper 660 cc minivehicles, rose 0.7% in the 12 months to March, totalling 5.868 million units.
Sales have stagnated at around the six million mark for the past four or five years as a shaky job market has kept personal spending at bay, Reuters said.
“Once the economy recovers, vehicle sales could come back to 6.5 to 6.6 million, but who knows when that will be,” Shigeharu Kimishima, senior analyst at Mitsubishi Securities, told Reuters. He added that the small rise this year was nothing to get excited about because it came off a low base the year before.
Reuters said that non-mini passenger cars owed their rise to a 10.6% jump in sales of cheaper compact cars, which have engine displacements of less than 2000 cc. Sales of regular-sized passenger cars fell 4.1%.
According to Reuters, the main consolation for Japan’s car makers is that the domestic market accounts for less than 10 percent of operating profits. With rapid growth in car markets in the rest of Asia, Japanese sales are becoming even less important.
Reuters said that means laggards like Honda won’t feel much pain from a fall in domestic sales, as long as it continues to perform well in the United States. Analysts told Reuters that market is about 10 times as important as the home market in profit terms.
According to Reuters, Honda, which has fallen behind its rivals in launching new models of late, saw its non-mini sales fall 0.3% to 589,811 units last business year. Its minivehicle sales have plunged 22% so far this calendar year.
Analysts told Reuters the war in Iraq, which many fear could dent US and European car sales, was unlikely to have a big effect on the Japanese market barring any sharp spike in oil prices.
But they differ over the outlook for Japanese vehicle demand this business year, with Kimishima telling Reuters he expected a 1% to 2% fall in sales, while JP Morgan forecasts sales will rise by another 3% to around 6.1 million units.
Non-mini sales at industry leader Toyota gained 1.6% to 1.703 million units, Reuters said, while Nissan, ranked number two in domestic sales, scored a 7.7% jump to 768,235 units.
Mitsubishi Motors sales, including its unit’s trucks, dropped 8.3%, while sales at Mazda fell 0.5%, Reuters added.
Minivehicle sales in the just-ended business year fell 1.1% to 1.825 million units, down for the third straight year, while non-mini vehicle sales grew 1.6% to 4.043 million units after falling 3.4% the year before, Reuters said.
