Following a first in years hike in the country’s consumption tax, Japan’s auto sales in September dropped, signaling a lingering weakness in Asia’s second-biggest car market.
Last month’s total vehicle sales slumped to 518,774 units from last year’s 522,760 figure, according to industry data released today. Since April, when the consumption tax was increased, auto sales have been negative in five out of six months.
“Individual consumption is taking a longer time than expected to recover,” commented Yoshitaka Hayashi, a director at the Japan Automobile Dealers Association.
The executive also said the auto dealers are growing weary of the local currency’s continued decline that might trigger prices of goods to rise – together with gasoline; further hurting consumer confidence and spending.
The Japan Automobile Manufacturers Association said that August’s car production figures were 6.7% lower, the second month to see a decline and the biggest slide in the past 12 months. Toyota’s local output dropped 10%, Nissan’s fell 21% and at Honda it slid by 4.7%.
The last time the government increased the local consumption tax was in 1997 and following the hike auto sales dropped for 21 continued months. Back in April, Prime Minister Shinzo Abe’s government raised the tax from 5 to 8% and is now mulling another hike to 10%.