Sales of new cars, trucks and buses in Japan were slightly lower in May 2003 than a year ago, mainly because of a sharp drop in demand for cheaper mini vehicles, according to a Reuters report.

The news agency, citing data from industry groups, said total Japanese vehicle sales shrank 0.4% in May to 419,692 while sales of 660cc mini vehicles, which receive preferential tax treatment, fell 6% to 128,329 units for the second straight month of decline.

That was offset to some extent by demand for minivans, defined as passenger cars with three rows of seats, Reuters added.

The recent introduction of several new minivans, including Mitsubishi's Grandis last month, boosted sales of full-sized vehicles 2.3% to 291,363 units, Reuters said.

Reuters noted that the latest results indicated that a sharp drop in overall sales in April was an aberration in reaction to aggressive sales campaigns in the final months of the business year to the end of March, as well as a change in the 'green tax system', which made some models more expensive from April.

In the year to date, overall vehicle sales in Japan are up 1.8 %, Reuters added.

"Most car makers have already adjusted to the narrowing of the 'green tax system' so there shouldn't be a big reaction to that in the coming months," a spokesman at JADA told the news agency.

Thanks to the popularity of new minivans and sport utility vehicles, sales of full-sized cars with engine displacement of over 2,000cc jumped 13% in May, making up for a 0.1 percent fall in sales of compact cars.

Reuters said that all five of Japan's top car makers expanded sales except Honda, whose sales fell by double digits for a second consecutive month, partly in reaction to especially strong demand for its Fit [Jazz] subcompact last year.

Reuters noted that analysts have said Honda's sales figures appear worse than they really are because some of its cars made overseas, including the Element and Fit Aria, are counted as imports.

The news agency reported that fourth-placed Mitsubishi Motors posted the biggest rise, with May sales surging 67%, while fifth-ranked Mazda’s sales rose 18% from a low base in May 2002.

Toyota and Nissan posted gains of 5% and 1.2% respectively, Reuters added.