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Japan Auto Sales Plunged to 37-Year Low
Feb 20, 2009

Auto sales in Japan dropped to the lowest in last 37 years during January 2009 primarily due to rising unemployment and bad economic conditions in the country.

The Japanese auto sales plunged to 37 years’ low (since 1972) in January 2009 and also sixth consecutive monthly decline, said the Japan Automobile Dealers Association, as reported by International Herald Tribune.

The total volume sales in January 2009 pegged at 174,281 Units (excluding sales of mini-trucks and mini-cars), down 27.9% from the same month a year ago and was the highest decline for January month on record. Auto industry sales (comprising buses, cars and trucks) reached the lowest level in last 34 years at 3.21 Million Units during 2008 from 3.43 Million Units in 2007, a straight fall of 6%.

Toyota, the world’s largest car manufacturer, recorded sales drop of 22% to 81,985 Units (excluding its Lexus brand) and sales of Honda slumped 31% to 22,087 Units.

As the economic crisis is engulfing the entire world and financial crisis is deepening, the demand for Japanese automobiles is shrinking drastically. The US and other key exporting markets for the Japanese auto manufacturers, including Toyota Motor Corp. and Honda Motor Co., witnessed low demand, resulting in decline of auto players’ profit.

Rising unemployment in Japan, which rose to 4.4% in December 2008 from 3.9% in its previous month, is one of the main factors for drop in auto sales. Unemployment has severely hampered the purchasing power of consumers who have cut down spending on big items like cars. Moreover, the shift in interest of young generation from cars has also reduced car sales.

Besides, the downtrend in the Japanese auto sales is likely to continue for some more time (till the second half of 2009). The magnitude of problem due to rising unemployment for the auto industry can be realized from the fact the nearly 400,000 non-regular workers will lose their jobs by the end of March 2009, said the Japan Manufacturing Outsourcing Association.

According to a Research Analyst at RNCOS, “Rising unemployment and unfavorable business conditions due to bad economic climate has hit the Japanese auto sales, forcing many auto manufacturers to cut down their production. As the prospects for improvement in the current scenario are very low, the downward trend in the production will continue.”

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