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Customer LoginsJapanese new vehicle sales fall 3.2% y/y in March, YTD volumes down 2.7%
Japanese sales of mainstream vehicles slipped 3.2% year on year in March, while the minivehicle segment extended its declining trend for a 15th month.
IHS Automotive Perspective
- Significance: New vehicle sales in Japan, excluding minivehicles, totalled 404,813 units in March, down 3.2% year on year (y/y). Minivehicle sales slipped 16.7% y/y to 231,088 units, marking the 15th consecutive month of decline.
- Implications: Japanese sales of mainstream registered vehicles slipped into negative territory in March because of a high base of comparison in the corresponding month of 2015. Year-to-date sales volumes are down 2.7% y/y at 917,639 units.
- Outlook: IHS Automotive forecasts a mild recovery of 1.05% y/y for Japanese light-vehicle sales (including minivehicles) in 2016, to nearly 4.99 million units. Although minivehicle demand is expected to remain weak in light of the current market conditions, some relief is expected from the government's financial incentives on certain fuel-efficient minivehicles. Moreover, the delay in the further increase in consumption tax from the current 8% to 10% until April 2017 (rather than the originally scheduled October 2015) is expected to support the Japanese market, at least prior to April 2017.
Japanese sales of new vehicles, excluding minivehicles, declined by 3.2% year on year (y/y) in March, according to data released by the Japan Automobile Dealers Association (JADA) today (1 April). Sales totalled 404,813 vehicles during the month, of which passenger cars accounted for 346,794 units, down 2.7% y/y. Bus and truck sales reached 55,340 units (down 6.3% y/y) and 2,679 units (up 5.1% y/y), respectively.
Within the mainstream vehicle segment, market leader Toyota reported a sales decrease of 0.9% y/y in March, to 177,189 units. It was followed by Nissan, which sold 51,202 units, down 3.9% y/y. Honda followed with a 5.8% y/y increase in sales to 49,751 units. Mazda came fourth with sales of 21,200 units, down 22.7% y/y. Fuji Heavy, the producer of Subaru-brand vehicles, followed with sales of 14,483 units, a 34.3% y/y decline. Sixth and seventh positions were occupied by Suzuki and Isuzu with sales of 12,353 units (up 13.2% y/y) and 11,186 units (up 3.3% y/y), respectively. Hino surpassed Mitsubishi to take eighth position with 8,747 units despite posting a decline of 5.4% y/y. The final two spots were occupied by Lexus and Mitsubishi, which reported sales of 7,452 units (up 40.9% y/y) and 6,416 units (up 21.5% y/y), respectively. Vehicle imports during the month totalled 43,858 units, down 3% y/y.
Meanwhile, sales of minivehicles, categorised as vehicles with an engine capacity of up to 660cc, remained negative in March, falling 16.7% y/y. According to data released by the Japan Mini Vehicles Association, sales in the segment reached 231,088 units. During the month, the segment was led by Daihatsu, which reported sales of 72,835 units, down 18.3% y/y. Daihatsu was followed by Suzuki, which posted sales of 65,093 units (down 10.2% y/y), and Honda, which recorded sales of 45,324 units (down 19.6% y/y). Nissan occupied fourth position with 25,342 units (down 19.6% y/y), followed by Mitsubishi with 9,711 units (down 12.1% y/y), Mazda with 5,142 units (down 27.4% y/y), and Subaru with 4,376 units (down 30.2% y/y). Toyota came last with 3,256 units, down 4.5% y/y.
Outlook and implications
Sales of mainstream vehicles in Japan declined y/y in February and March after registering growth in the preceding four months. The y/y decline can mainly be attributed to the high base of March 2015, when sales of new vehicles had risen ahead of the implementation of new, stricter eco-car tax breaks based on fiscal 2020 standards in April 2015. Previous rates had been based on the fiscal 2015 standard. The changes affected vehicle acquisition tax, which is imposed at the time of purchase, and tonnage tax, which is collected upon purchase as well as during safety inspections.
For the full year 2015, the market shrank 4.2% y/y to just over 3.15 million units. The decline was mainly down to negative payback effects of the consumption tax rise in April 2014 from 5% to 8%, while macroeconomic factors such as higher inflation and weak wage growth reduced the momentum of consumer spending in the country. Consumer spending fell 0.8% in the fourth quarter of 2015, following a 0.4% rise in the third quarter, reflecting the influence of bad weather and continued sluggish demand for cars and other durable goods. The impact of adverse weather will now drop out of the equation, which is likely to lift spending in the first quarter of 2016, and softer inflation will underpin consumer sentiment, although financial turmoil and the introduction of the Bank of Japan's negative interest-rate policy could weigh down on high-end expenditures by business owners and pensioners' spending. Consumer spending is likely to remain weak unless labour shortages and low oil prices encourage companies to increase the wages of part-time workers and employees at small and medium-sized enterprises.
Meanwhile, minivehicle sales in the country declined for a 15th straight month in March. The segment is suffering from the negative impact of a 50% increase in minivehicle ownership tax introduced in April 2015. According to Yoshiaki Kawano, a senior Tokyo-based IHS analyst, minivehicle demand is expected to remain weak for the next several months in light of the current market conditions.
Considering these factors, IHS Automotive forecasts only a mild recovery in Japanese light-vehicle sales (including minivehicles) in 2016, to nearly 4.99 million units, which would mark an increase of 1.05% y/y. Nevertheless, in the long term, the delay to the further increase in consumption tax from the current 8% to 10% until April 2017 (from an originally scheduled October 2015) is expected to support the Japanese market, at least prior to April 2017.
About this article
The above article is from IHS Automotive Same-Day Analysis of automotive news, events and trends, and is a deliverable of the World Markets Automotive Service. The service averages thirty stories per day and also provides competitor and country intelligence. Get a free trial.