New vehicle sales in Japan declined by a further 4% to 312,406 units in May 2024 from 326,731 units a year earlier, according to the Japan Automobile Manufacturers Association (JAMA).

The market has been in decline since the end of last year when Daihatsu was ordered to halt all production after an investigation found the company had falsified safety test results over a period of decades. This also affected sales of models shared with other brands including Toyota, Mazda and Subaru. In early May the company was allowed to resume full production, with sales expected to rebound in the coming months as the company fulfils order backlogs.

The Japanese economy shrank 2% year on year in the first quarter of the year following a 0.4% decline in the fourth quarter of 2023, reflecting weak domestic consumption and exports. Economic output was disrupted by the earthquake on the Noto peninsula in January as well as by Daihatsu’s production stoppages. Bank of Japan ended its negative interest rate policy in April with household spending expected to pick up in the second half of the year following recent wage hikes across the country.

Overall vehicle sales in Japan fell 15% to 1,753,891 units in the first five months of 2024 after growing by 17% to 2,057,881 in the same period of last year, with passenger vehicle sales declining 13% to 1,488,173 units while truck sales dropped 23% to 261,399 units.

Sales of medium and large buses and coaches continued to recover from the Covid related travel restrictions with their market growing 19% to 4,319 units year to date (YTD).

Toyota YTD sales fell 25% to 522,623 units with deliveries also affected by a data rigging scandal at an affiliated diesel engine supplier. Daihatsu sales plunged 69% to 84,711 units YTD while Mazda sales were down 29% at 59,091 units.

Companies not affected by the recent Toyota Group scandals fared much better, Suzuki with a 15% increase to 316,507 units and Honda with 282,534 (+18%) while Nissan sales were just slightly lower at 209,519 units.