Japan's new car sales hit 30-year low

Domestic sales of new motor vehicles with engines of over 660cc dropped 10.5 per cent in the first half of 2007 from a year earlier to a 30-year low of 1,788,440 units, the Japan Automobile Dealers Association said.

The result for the January-June period represents a year-on-year fall for the second consecutive year and is comparable to the 1,742,109 vehicles sold in the first half of 1977.

Behind the poor showing were higher gasoline prices and the tendency of young consumers to spend more of their money on things other than automobiles, analysts said.

As domestic new car sales in June suffered a year-on-year fall for the 24th consecutive month, a JADA official said, measures to turn the situation around, such as a simpler automobile-related taxation system, are needed.

The sales decline in the first half of the year was led by a 15.1 per cent fall in sales of small passenger cars, which account for around 50 per cent of total auto sales.

The three biggest Japanese automakers failed to avoid the market contraction. Sales of cars at Toyota Motor Corp. other than Lexus vehicles decreased 10.9 per cent. Sales at Nissan Motor Co. fell 13.2 per cent while those at Honda Motor Co. were down 5.6 per cent.

Automakers are hoping to stimulate demand by introducing new car models in the second half of the year. Katsuaki Watanabe, president of Toyota, which is targeting sales of 1.72 million vehicles in Japan in 2007, said the domestic market will "surely pick up in the second half."

Meanwhile, the Japan Mini Vehicles Association said domestic sales of new minivehicles with engines of up to 660 cc totalled 1,054,080 units in the first half of 2007, down 1.7 per cent - the first year-on-year drop in four years - following brisk sales in the same period last year.

In June, 291,640 vehicles with engine displacements of more than 660 cc were sold in Japan, down 11.2 per cent from a year earlier, while sales of mini-vehicles slid 6.1 per cent to 170,526 units for a third straight month of decline, according to the two auto industry associations.