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Japanese Automobile Sales to touch 31-year Low
Jan 29, 2009

Japan’s total vehicle sales fell down to the lowest level in 31 years as a result of economic recession due to which demand and production has dipped down.

According to the Japan Automobile Manufacturers Association (JAMA), for the first time since 1977, Japan’s total automobile sales are expected to reach below the five million mark in 2009, as reported by
The Earth Times.

Sales of Japanese new cars, buses and trucks, comprising of 660cc mini-vehicles, are expected to decline by 4.9% in 2008, marking it as the fifth successive year of decline for the Japanese car market, the third largest in the world. Also, car sales are likely to decline 6.9% to reach three million Units while the overall domestic sales are expected to contract by 4.5% in 2008 to reach 5.11 Million Units.

The decline in Japanese car sales is primarily due to economic recession in the country, which is the second largest economy of the world. The ongoing financial crunch contained the demand for new cars in 2008 and the trend is expected to continue this year as well. Additionally, cars include several other types of costs over the price tags, like taxes, and parking and toll charges, which are tough to bear in times of financial meltdown.

Weakened consumer confidence and credit scarcity have jointly pushed down the sales figures. This, in turn, has compelled the auto makers to reduce the production and carry on with the existing stock. Japan’s leading automakers like Honda Motor Co. and Toyota Motor Corp. are cutting down their output so as to reduce their losses.

Moreover, Japanese cars are no longer regarded as status symbols by younger population of the country. In several big cities like Tokyo, cars are considered as dispensable.

Furthermore, lower domestic demand has compelled the auto manufacturers to shift their focus towards foreign markets. Strong Yen is also adversely affecting the country’s auto sector as it reduces the profit margin on cars exported from Japan and reduces the value of overseas earnings when exchanged back into Japanese currency.

According to a Research Analyst at
RNCOS, “The economic recession in Japan is indicating towards the negative prospects for its automobile industry in the coming year. Thus, to support the industry, government should plan bailout packages. However, the prospects of recovery appear very feeble for the automobile industry.”

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