Japan Auto Sales Climb Most in 14 Months as Korea Slumps
Japan saw September vehicle sales jump the most in 14 months, adding to signs of an improving outlook in the world’s third-largest economy.
Deliveries of passenger and commercial vehicles last month rose 17 percent to 522,760 units, according to data from associations released yesterday. That reversed a four-month slide and helped July-to-September sales increase 2.3 percent, the first gain in four quarters.
While sales fell 4.8 percent in the first three quarters, deliveries aren’t falling as steeply as the 12 percent that the Japan automakers’ association predicted for 2013. In other signs of recovery, rising share prices are enriching investors, the weaker yen is bolstering exporters’ earnings and a Bank of Japan survey released yesterday showed business confidence among large manufacturers at the highest level since 2007.
“The biggest force that’s been giving domestic auto sales a boost is the improvement in the markets and optimism among consumers,” said Mitsushige Akino, chief fund manager at Ichiyoshi Asset Management Co. in Tokyo. “The improvement in the economy and new models will continue to buoy demand.”
Toyota Motor Corp. (7203), Japan’s biggest carmaker, fell 0.5 percent to 6,240 yen as of 1:56 p.m. in Tokyo trading. Nissan Motor Co. (7201) slipped 1.3 percent, and Honda (7267) Motor Co. declined 1.2 percent. The benchmark Nikkei 225 (NKY) Stock Average retreated 1.9 percent.
Japan’s three biggest carmakers, Toyota, Honda, and Nissan, all reported declines in the U.S., their biggest overseas market, for September on lower supplies of some models and fewer weekend selling days.
The sales gains in Japan were a contrast to South Korea, where Hyundai Motor Co. (005380)’s sales in its home market plunged 20 percent last month, leading a 13 percent drop in industrywide deliveries, excluding imports. South Korean automakers sold a combined 101,021 units in September, the fewest since February, based on Korea Automobile Manufacturers Association figures.
In Japan, the world’s third-largest auto market, last quarter’s increase in vehicle deliveries follows declines of 6.1 percent and 9.4 percent in the preceding two quarters, according to data compiled by Bloomberg.
Honda led gains last month with deliveries surging 40 percent as the company began selling its remodeled Fit hatchback to challenge Toyota’s lead in hybrid compact cars. Toyota saw domestic sales, excluding minicars, rise 12.5 percent last month. Local deliveries rose 16 percent at Nissan and 14.5 percent at Mazda Motor Corp. (7261)
“The growth in September was very strong, much more than I expected,” said Yoshiaki Kawano, a Tokyo-based industry analyst at IHS Automotive. “It seems Honda’s Fit was very strong, and with other models from Mazda and other companies coming out, I think we can expect sales to continue to grow.”
Deliveries in Japan may be boosted as consumers buy cars before the sales tax increases in April, according to Koichi Sugimoto, Tokyo-based auto analyst BNP Paribas SA said in a report. BNP Paribas’s forecast for sales of 5.5 million vehicles in Japan for the year ending March 2014 may be conservative, Sugimoto said.
Prime Minister Shinzo Abe yesterday said he’ll push for a 5 trillion yen ($51 billion) stimulus plan and go ahead with plans to raise the sales tax for the first time since 1997, starting with an increase to 8 percent in April, as he seeks to rein in the world’s biggest debt burden without negating efforts to end deflation. The sales tax would rise to 10 percent by October 2015, according to the government plan.
That’s worried automakers, including Akio Toyoda, president of Toyota and chairman of the Japan Automobile Manufacturers Association, who said in August that increasing sales taxes without cutting vehicle levies would deal a “lethal blow” to the industry.
To relieve carmakers, Japan is poised to abolish the 5 percent automobile acquisition tax, Toshiyuki Uemura, a member of a government panel on vehicle taxation, said in an interview last month.
Still, removing the purchase duty won’t be enough to offset the increase in the sales levy because most cars sold in Japan have rebates on the automobile acquisition tax, Uemura said.
The tax break on fuel-efficient cars was applicable to about 80 percent of new vehicle sales in the year ended March 2012, according to Japan’s Ministry of Internal Affairs.
Auto sales had been falling in the past year after some government incentives to buy fuel-efficient vehicles expired. Those rebates helped deliveries surge 28 percent in 2012. Vehicle demand in the country had been falling for more than two decades as more Japanese consumers choose to take the subway instead of driving a car.
Japanese automakers are also grappling with a home market that’s estimated to face an aging and declining population for decades.
In an effort to reverse declining interest, the heads of Japan’s biggest automakers have begun a one-month campaign to promote cars to university students. Toyoda went to Meiji University last week and the presidents of Honda and Subaru-maker Fuji Heavy Industries Ltd. (7270) are scheduled to visit schools later this month.
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