Japanese automakers expect recovery in domestic demand following introduction of subsidies image

Japan’s carmakers are optimistic about sales in their home market next year, as the government extends tax breaks and introduces subsidies.

Demand for cars, trucks and buses in Japan is expected to grow by about 900,000 units in 2012 after it dropped 14 percent this year, according to a forecast from the Japan Automobile Manufacturers Association (JAMA).

“We expect car sales to grow at the 2009 pace, when tax cuts and subsidies were introduced,” JAMA chairman Toshiyuki Shiga was quoted as saying by Bloomberg. Car production was disrupted this year by the March earthquake and tsunami and also by the floods in Thailand. Toyota had to cut its profit forecast by more than half.

Demand in Japan is expected to decrease this year to 4.25 million units from 4.95 million units in 2010, JAMA estimates. The Japanese government announced it will offer 300 billion yen ($3.8 billion) for the auto incentives as part of the country’s fourth post-earthquake budget. The subsidies will apply to environmentally friendly cars registered from today, provided that the new budget is passed. According to Shiga, industrywide vehicle sales may increase this year by 7-8 percent.