Japanese market sales will fall below 5m in 2009 and there is little reason to believe that there will be a significant recovery in the medium to long term.

Global Insight‘s Ian Fletcher said Japanese domestic sales made their largest ever year-on-year December plunge last month – 22.3% 183,549 units. Passenger cars were off 22.8% to 158,785 units and commercials down 19.6% y/y to 23,887 units.

Full year sales dived 6.5% to 3.21m, 5.2% to 2.80m cars plus a 14.8% commercial vehicle decline.

“As is to be expected amid such a downturn, no automaker emerged from the final month of the year unscathed,” Fletcher said in a research note.

Toyota was off 17.8% to 77,157 units, Honda down 25.3% to 27,505 units and third-placed Nissan off 21.8% to 26,934 units.

Despite this, Honda achieved some growth in the full year, its sales growing by 6.4%. Moderate growth for the full year was also recorded by Suzuki Motor and Fuji Motor, whose sales rose by 0.4% and 0.3%, respectively.

The minivehicle segment also struggled in December, having been sturdy over the previous couple of months, its sales falling by 6.7%.

Total sales thus contracted by 2.6% in the minivehicle sector over the course of 2008.

On a brand basis, all automakers recorded declines to varying degrees in December, Global Insight said.

Daihatsu posted a slide of just 0.4% to 39,345 units while Suzuki’s 39,172 sales was a decline of 3.6%. The largest percentage monthly declines were reported by Mitsubishi and Fuji Heavy, with falls of 19.0% and 29.1%, respectively.

Daihatsu was the only brand to record growth during the year, of 3.3% to 635,164 units.

“As the global sales contraction continues, Japan is clearly not immune from the downturn. When taking into account the fact that there were two additional selling days during December compared with the same month of 2007, the picture becomes even bleaker: the adjusted decline in the total number of vehicles sold in the month was around 28%, with a 29.5% fall for passenger cars and a drop of 26.6% for commercial vehicles,” Fletcher wrote.

“Minivehicles fared no better, sales falling a further 15% during the month despite the influx of new models such as the Daihatsu Move Conte and TANTO, Honda’s latest-generation Life, and the replacement for Suzuki’s Wagon R, which was followed by the Alto Lapin at the end of November.

“The market slowdown has come about as economic confidence in Japan has been hit in the wake of the current global economic downturn. Commercial vehicle sales have been falling for some time now, and the fact that business confidence has now plummeted is unlikely to help matters in this segment.

“Retail sales fell 0.6% y/y in November after a 0.3% decline in the previous month and household spending also fell by 3.8%, indicating a prevailing sentiment of caution in the market as a whole.

“The governor of the central Bank of Japan (BoJ) has warned that the economy is sliding into a state of “rapid stagnation” following the string of lacklustre data, and the BoJ has now lowered interest rates to just 0.1%.

“Although the government has announced plans to boost spending through its new JPY88.5 trillion (US$964.2bn) fiscal package as part of the budget from 1 April, this is unlikely to solve the current market woes any time soon for the automakers.”

The Japan Automobile Manufacturers Association (JAMA) expects a further decline in 2009 sales of 4.4% to 4.86m units.

“This would be the first time in over 30 years that total vehicle sales fall under 5m units, and it would be well below the highs reported in the 1990s,” Fletcher added.