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Japan?s Auto Sales on Downward Spiral
Feb 28, 2008

Sales of automobiles in Japan are taking a nosedive as population declines, incomes remain stagnant, young men prefer not to buy cars and oil prices continue to soar.

The Japan Automobile Dealers Association revealed that the country recorded lowest sales in the domestic auto market in last 35 years, as reported by
detnews.com.

In 2007, a 7.6% fall brought down sales of new cars, trucks and buses to 3.434 Million units. New vehicle sales alone dropped by 7.1% against sale of new cars in 2006 to 236,142 units in December 2007, marking the first decline in three months since October 2007. Declining sales hit all the leading automobile manufacturers substantially in the domestic market.

The slump in car sales in the country is reflecting the downtrend. It has been shrinking in the domestic market for the last four years whereas the overseas markets have proved profitable for the car firms.

Among the leading factors for dismal car sales in Japan is the declining population in the country. As a result, the demand for automobiles is declining. In addition, the limited growth in incomes is also responsible for falling car sales, thus affecting the overall sales of cars. As wages come to a standstill, they are taking a toll on the purchasing power of the people, which in turn is having an adverse impact on sales.

Another factor that hugely contributed in decline of auto sales in Japan is the reducing percentage of young males who are opting to remain car-less has gone up from a quarter to a third and it is seriously damaging domestic sales of cars in the island country.

Moreover, as oil prices around the world continue to surge, the population of Japan finds itself increasingly unable to afford automobiles. High oil prices are proving a deterrent for consumers, forcing them to keep away from cars. Increased price of ownership to population gentrification is adding to the reasons for falling car sales in the country.

A Senior Research Analyst at
RNCOS says, “It is necessary for the automobile industry to take corrective steps like bringing down car prices to increase affordability for consumers. Even the automakers have to focus on R&D to come out with new and fuel-efficient models to boost demand of automobiles in the domestic market. It is advisable for Japan’s automobile dealers to concentrate on youngsters to raise automobile sales.”

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