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Japan Autos Report Q1 2011
Business Monitor International, Nov 2010, Pages: 47
Japan Autos Report provides industry professionals and strategists, corporate analysts, auto associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Japan's automotive industry.
New vehicle sales, excluding mini vehicles, in Japan fell year-on-year (y-o-y) for the first time in 14 months in September 2010 after green car subsidies ended. It was not an unexpected turn, after the rush to claim incentives before the September 8 deadline prompted sales growth of over 46% in August. Moreover, with total sales for the nine months to September still 18.7% higher y-o-y, we have raised our forecast slightly to 16%. There are still other forms of government incentive in place to keep sales ticking over. Tax breaks on fuel-efficient cars are in place until April 2011. Moreover, sales of imported brands were up 45% in September and 27% for the nine months, which puts added pressure on the domestic carmakers that are already suffering from the effects of the strong yen.
While the Japanese Automobile Manufacturers Association (JAMA) welcomes the government's intervention in weakening the yen against the dollar, it believes more action needs to be taken to avoid widespread losses and job cuts in the auto sector. With several carmakers planning around an average rate of JPY90.00/US$ for the year to March 2011, JAMA says that the recovery to JPY85.00 is not enough.
The strong yen erodes the competitiveness of Japanese exports and carmakers have already made moves to shift some production overseas. Imported brands, meanwhile, have been capitalising on the strength of the yen, offering massive price cuts, particularly in the run-up to the end of the scrappage scheme. One of the biggest shifts as a result of the incentive withdrawal was in the small car segment, which posted growth of 52% in August, but which fell 12% in September. This shift is also evident in brand results as reported by JAMA. Those brands benefiting from the incentives for fuel efficient cars fared worse when the incentives were withdrawn, which is a similar trend to the witnessed in the US when comparing sales results from August with those of the previous August when the 'cash-for-clunkers' scrappage scheme was in operation. Toyota Motor, which has boasted the best-selling car for the 15 months to August with the Prius hybrid, saw sales fall by 7%, while Honda Motor, which has made gains through its Fit small car, registered a drop of 8%.
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