Toyota Motor Corp. and Honda Motor Co., Japan’s two biggest automakers, led the third straight increase in the nation’s monthly auto sales as government incentives boosted demand.

Sales of cars, trucks and buses, excluding minicars, rose 13 percent to 263,506 vehicles in October from a year earlier, the Japan Automobile Dealers Association said in a statement today. Toyota sold 133,877 units, excluding Lexus-brand cars, up 14 percent.

Auto sales in Japan reversed a yearlong slide in August as government rebates and tax cuts for fuel-efficient vehicles helped lift demand for Toyota’s Prius and Honda’s Insight hybrid cars. Honda almost tripled its full-year profit estimate last week and raised its forecast for domestic vehicle sales to 665,000 from 635,000, citing the stimulus effect.

“Government incentives will continue to boost sales through March,” said Mitsuru Kurokawa, an analyst with consulting company IHS Global Insight in Tokyo. “Carmakers are also expanding their line-up of applicable models” by improving fuel economy.

October sales jumped 30 percent at Honda, while Nissan Motor Co., the nation’s third-largest automaker, sold 15 percent more vehicles.

Under a government program started in June, consumers can apply for a 250,000 yen ($2,780) subsidy if they scrap a car more than 13 years old to buy a new one, and 100,000 yen for a new car purchased without scrapping an old one. The subsidies are available retroactively for purchases from April 10. The program is due to expire at the end of March.

Annual Sales Decline

The government expects the incentives to lead to the sale of an additional 690,000 vehicles this fiscal year. Electric, hybrid, natural-gas, and some diesel vehicles also qualify for an exemption from the country’s weight and purchase taxes.

Domestic sales this fiscal year may still be the worst in three decades due to Japan’s recession. Wages fell for a 16th straight month in September, and unemployment remains near a record high at 5.3 percent.

The Japan Automobile Manufacturers Association predicts domestic industrywide sales will drop 8.5 percent to 4.3 million vehicles in the year ending March 31.

Source: Bloomberg


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