Japan's auto sales plunged 38% in May

The Wall Street Journal (Tokyo) - Japan's auto sales slumped 38% from a year earlier in May, hammered by a shortage of parts as a result of the March 11 earthquake. But the sales drop was less than the record plunge in the previous month, as car makers were able to operate domestic plants for the whole month for the first time since the disaster.

Domestic sales of new cars, trucks and buses fell to 142,154 vehicles in May from 228,514 in the same month last year, as supplies of some parts remained crimped.

Sales of Toyota Motor Corp. vehicles plummeted 57% to 48,733 in May, with those of the luxury Lexus brand down 5.3% at 1,789. The weak numbers came out the same day Toyota announced a global recall of about 140,000 vehicles, including 106,000 first-generation Prius hybrids, in the U.S., Japan, the U.K., Germany and elsewhere.

Nissan Motor Co.'s sales dropped 16% to 28,037, and Honda Motor Co.'s sales tumbled 35% to 21,294.

However, sales in May edged toward a recovery from the 51% drop to 108,824 vehicles in April, with auto makers having reopened many factories from the middle of April.

The better May sales performance follows recent improvements in the outlook for output resumption by some makers.

Toyota and Honda both said in recent days that they expect domestic manufacturing to be back to normal by summer, sooner than previously expected, suggesting sales should rebound at a healthy pace in the coming months.

Nissan Chief Executive Carlos Ghosn has pledged to increase Nissan's year-to-year sales by making up for lost production during the fiscal second half through March.

But a return to full production in the summer would come at a sensitive time, with large areas of eastern Japan facing potential power shortages as many power plants remain offline after the disaster.

In an industrywide scheme to deal with power outages, the Japan Automobile Manufacturers Association said in late May that car makers will close domestic plants Thursdays and Fridays. Instead, they will operate Saturdays and Sundays from July to September to reduce power use during the week.

But it was unclear whether a production recovery will enable auto sales to reach JAMA's initial estimate of 4.47 million vehicles, including minivehicles, for 2011. In the first five months of the year, sales in Japan totaled about 1.57 million vehicles, about 35% of the full-year target.

"It is too early to update our forecast at this stage," said Toshiyuki Shiga, chairman of JAMA and Nissan's chief operating officer, at a news conference.