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Japan car lobby wants help as sales head to 32-yr low

  Japan’s auto industry lobby forecast on Tuesday the lowest domestic vehicle sales in 32 years for the coming business year, saying it would seek government help to stimulate recession-hit demand.

The Japan Automobile Manufacturers Association (JAMA) said it expected sales of new cars, trucks and buses to fall 8.0% to 4,297,600 units for the financial year starting on April 1. That would be the lowest amount since 1977/78 and would follow an estimated 12% fall in the year ending this month to 4,669,800 units.

“With the Japanese economy weakening and the outlook for employment looking very uncertain, consumers are in no mood to buy a car,” JAMA Chairman Satoshi Aoki told a news conference.

Demand for passenger cars in Japan, the world’s third-biggest market, had already been on a downward track, falling for the past three years largely because of a population shift to cities, well-served by an extensive public transportation system.

The global economic crisis has exacerbated that trend as car owners in Japan wait longer to replace their ageing vehicles. JAMA is counting on a bill, expected to pass in the coming week with the government’s broader budget plan, that would incentives the purchase of low-emission cars to help add about 310,000 vehicles in sales in the 2009/10 business year.

But Aoki added that more stimulus was needed, pointing to Germany’s successful car-scrapping incentive program as an example of something that could be implemented in Japan. “We need to prop up demand further on a broader basis,” he said. “Germany’s system could be one guide, and we want to seek help from the government.”

The German government is offering car owners €2,500 ($3,415) if they turn in vehicles over nine years old and switch to new models with lower emissions. That helped the country’s new car sales jump 21% in February from a year earlier for the first rise in half a year.

The incentive program is capped at €1.5 billion, but the government is planning to extend it by up to €1 billion, a German newspaper reported this week.

SINKING PRODUCTION

The severe downturn in most major car markets is hurting automakers everywhere, forcing them to scale back production and work force. Auto executives have declined to predict where sales figures would land this year given the uncertainty over when the global economy would turn a corner.

In the latest sign of uncertainty, the Asahi newspaper reported that Toyota Motor Corp would produce 13% fewer vehicles in Japan in May than it had previously planned due to weaker-than-expected sales. Toyota has not disclosed those plans, and a spokesman declined to confirm the report.

“There’s a sense in the market that the pace of production decline would start to ease from the new business year as inventories normalize, and I think that hasn’t changed,” said Yoshihiko Tabei, an analyst at Kazaka Securities.

Data from Japan’s eight carmakers on Tuesday showed their global production fell as much as 65% in February from a year earlier, with most companies still in the process of working down a bloated inventory of unsold cars.

Global production at Toyota, the world’s biggest automaker, plunged 53% in February to 358,573 units, marking the biggest drop and the lowest output for any month on company records, a spokesman said. He added that Toyota expected the year-on-year slide in domestic output to continue after April.

TOKYO MOTOR NO-SHOWS

Global automakers’ financial woes are claiming another victim: international auto shows. JAMA said on Tuesday it would shorten this year’s Tokyo Motor Show by four days to 13 days to help save money for those participating.

Announcing the list of participants, JAMA said Japan’s four truck makers, along with most other foreign carmakers, had pulled out of this year’s event, one of the world’s five major international auto shows, scheduled to open on Oct. 23.

Japan’s eight domestic passenger car makers will be joined by just Ferrari, Hyundai Motor Co, Lotus, Maserati, Porsche and Alpina in that category. Volkswagen AG , Daimler AG and BMW , Japan’s top import brands, will not attend.

“It’s very disappointing that we will have far fewer participants this year, but we are facing an unprecedented crisis now,” Aoki said. “But motor shows continue to be important for carmakers to show off their latest products and technologies and I hope the next one will be well-attended.”

Last week, Britain’s car industry said it would cancel its show in 2010, while Japan’s Nissan Motor Co and Mitsubishi Motors Corp have said they would skip the major show in Frankfurt this autumn. (Reuters)