Japan car sales rise 36 percent in January after tax breaks image

Japanese new car sales recorded strong growth in January, boosted by the government’s efforts to help its struggling auto industry.

Japanese automakers expect strong growth this year in their home market as the government extended tax incentives to buy fuel-efficient cars beyond the March deadline and also added new subsidies on December 20 to scrap older cars.

New car sales in Japan rose 36 percent to 415,931 in January, according to industry data. Excluding 660cc minivehicles, sales increased 41 percent to 263,267 vehicles, the biggest rise on record for the month of January. Japan is the world’s third-largest car market after China and the U.S.

“The tax incentives and subsidies helped a lot. New model launches and environmentally friendly cars like Toyota’s Aqua and Prius and Honda’s Fit are doing particularly well,” Michiro Saito from the Japan Automobile Dealers Association was quoted as saying by Reuters.

The incentives especially favor hybrids, pure electric cars and other vehicles that employ advanced technology such as clean diesel engines. Toyota and Honda are the manufacturers that profit the most from the new incentives. Excluding minivehicles, Toyota sales grew 46 percent in January, while Honda rose 59 percent in the same month in Japan. Half of the Hondas sold in Japan were hybrids.

Industry officials expect a 19 percent rise in new vehicles in 2012 in Japan.