While much of the chatter at the Detroit auto show is about Toyota’s imminent overtaking of GM as the world’s largest automaker, the Japanese domestic carmarket ended the 2006 with a whimper. By year-end, auto sales in Japan fell 1.9% to 5.73 million, the lowest level for twenty years and 25% off the 1990 peak. Even more depressing for carmakers is that the slump comes amid a boom in low margin 660cc minicars, sales of which grew by 5.7% to a record 2.02 million. By contrast, sales of subcompacts, in big demand overseas, are falling. One reason is that newer subcompacts, built with global markets in mind, have become too big for Japanese tastes.
The future looks just as grim. With Japanese car buyers holding on to cars longer, 2007 looks being even worse. For 2007, the Japan Automobile Manufacturers Association projects that total vehicle sales will fall a further 1.9% to 5.63 million units.