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Japan auto lobby sounds alarm over weak domestic sales

37 Comments
By Maki Shiraki

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37 Comments
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More whining by an industry that has had its own way over government policy for far too long. Now this guy shows distain for Abenomics because all the money printing and government overspending doesn't induce consumers with stagnating and declining incomes to waste money on a soon depreciating new car. Abenomics should be trash-talked, but not because of falling domestic auto sales.

9 ( +12 / -3 )

Abe snaps his fingers and thinks that the people will buy more products and support industries like the automobile makers but he is so out of tune to the reality that people won't purchase big ticket items when the economy is in a funk and there is no real light to the end of the tunnel.

6 ( +8 / -2 )

“Abenomics is not having clear traction across the country and even though as an industry we benefit from the weaker yen, we feel a sense of crisis about the fact that cars are actually not selling,” he said.

Just what many of us said all along. Abenomics is nothing but "voodoo economics" -- all sizzle and no steak. And, the really bad news is, he just got elected for four more years.

2 ( +9 / -7 )

Japan auto lobby sounds alarm over weak domestic sales

Ding! Dong! So, they are saying that, increased taxes and no salary increases have resulted in a downturn of domestic sales, especially for major investments? I think any armchair economist could have summized this one. Abenomics = Fail!

10 ( +13 / -3 )

From what I've read in the past, Japan's domestic auto industry will continue to decline because of an aging population and younger folks who've discovered they don't need the expense and hassle of owning a car. So combine that with the situation now of less disposable income and you have to think this spells even more trouble.

8 ( +8 / -0 )

@paulinusa

Japan's domestic auto industry will continue to decline

It will also decline as we move more to the sharing economy powered by communication technology, where one car may be enough for several families. This is a great trend for the environment.

2 ( +3 / -1 )

“We are seeing continued weakness in domestic new car sales that go beyond a backlash to the April sales tax hike,”

Yeah, it's not only the tax hike, it's the fact that for the majority of people, their spending power has significantly decreased in the past two years. People simply can't afford to buy new cars right now.

I predict we will be hearing comments like this from more industries in the coming months.

5 ( +6 / -1 )

For the average city dweller, a car isn't worth the expense in Japan. They are quite cheap to buy, but the upkeep (parking, shaken, etc) makes it prohibitive for people who have enough expenses and not enough salary as it is. Domestic consumption is not going to increase until salaries do. Full stop.

11 ( +13 / -2 )

Hmmm, raise taxes + no salary increase = reduced spending on unnecessary items.

Simple math, but I suppose is too difficult for the government zaibutsu to comprehend. They should have seen this coming after the April 1 tax increase.

5 ( +5 / -0 )

"Domestic consumption is not going to increase until salaries do."

Bingo. Corporations refuse to bump salaries then bemoan people for not spending their diminished (real) wages.

As mentioned above, this is good for the environment. The global auto industry thinks billions of Indians and Chinese driving cars is a good thing. Sure, if Beijing is your idea of eco-topia.

2 ( +4 / -2 )

Thought they're raking in record profit from abroad due to weak currency. Geez......talk about greediness! Lower the purchase price & maybe things might start looking positive. Other car makers will be lowering price and try to ride the cheap gas euphoria of buyers.

3 ( +5 / -2 )

with unexpectedly weak domestic sales

Are they idiots? Increasing the tax meant increasing the car prices by huge amounts, the weak sales were totally expectable...

5 ( +6 / -1 )

Watch for govt subsidies to be announced so people can upgrade to newer models, it has been done before and will be done again, this will be one way of getting the domestic car sales moving again.

Most overseas markets auto sales still seem to be going ok and some have increased especially in the used area, thing is though with out the locals renewing their 2 or 3 year old cars we run out of suitable vehicles for export.

Tax breaks for new car buyers coming right up.

4 ( +4 / -0 )

Abenomics measures where made for them. Yet, they find how to complain, just to make sure they will not have to rise the salaries as Abe wants to.

5 ( +6 / -1 )

I sold my car and moved closer to work so that I can walk or bike. More expensive place... but the money I save! They say the average american spend 15% of their income on their car. In Japan I was EASILY spending 25 to 30%. TWO sets of tires (that were more expensive domestically than the exact same ones in USA.. made in Japan). Gas that is 6$ a gallon. Car tax. Shaken. Car insurance. On top of that rage inducing terrible idiot drivers. Driving in Japan. NO THANK YOU!

9 ( +11 / -2 )

It's hardly any wonder. Growing numbers of young people, who increasingly find work at convenience stores, fast food outlets or other low-paying jobs, not only can't afford a car -- they can't even afford the several hundreds of thousands of yen needed to attend the obligatory driving schools in order to prep for a driver's license.

3 ( +4 / -1 )

Have sales truly declined or did they just not hit their usually over inflated sales goals?

0 ( +1 / -1 )

As Japanese Auto makers are the biggest in the World, as an idea make them pay tax.? Pass this money down to consumers and tax the consumers less but there are more of them offsetting any loss off income never received anyway. Now that is trickle down. Of course coming from a healthy gene pool I don't expect those in power would think of that.

0 ( +3 / -3 )

And the domino effect is FINALLY starting to be seen by all, far too late.

-1 ( +7 / -8 )

But of course there are those who will say "Japanese companies are making record profits, and are sitting on piles of cash", but those are companies which are exporters who now produce most of their goods outside Japan. They also keep their profits outside Japan, if they are smart, that is.

Japan's automakers have been losing money on domestic sales in Japan for many years. The reasons have nothing to do with wages. They have to do with the absurdly high cost of owning a car in Japan. The road tax, gas tax, two year inspection charges, high road tolls, and parking costs have driven the domestic Japanese auto industry under.

Some might think that owning cars is a bad thing, and that it is good that fewer people own and drive cars. But you must remember that the auto industry is a large employer, and not just the factories themselves. There are accessory shops, repair shops, car washes, and other industries which are closely associated.

Lastly, most of Japan is not urban, it is rural, and to get around people need cars. By increasing the cost of owning and operating a car, people tend to go out and drive less, and drive for shorter distances. This means that they don't travel to neighbouring towns and for shopping, or weekend holidays, etc. And people in the suburbs tend not to venture out far, so the outlying towns and places in the countryside get few city visitors who spend money during their visits. This is another reason for the decline of rural populations. Also, money spent on car-related expenses is money which cannot be spent on clothes, food, housing, or raising children.

0 ( +7 / -7 )

I agree with the last post.

Maintaining a car here is a lot harder than getting into the position to buy one.

Furthermore with car dealerships ignoring the warranty they're making every effort to NOT spend money replacing parts that needed to be replaced before the warranty expires.

It's so bad now that they even LIE.

I have custom wheels on my car with a special key lock for one of the lug nuts. Without this key the wheels can't be taken off.

In the afternoon when I went to pick up the car they proceeded to explain the list of checks and changes they did. I was a bit surprised when they said they changed the brake pads and rotated the wheels. "Your car is excellent condition now" they said.

Really? How did you get the wheels off? The salesperson looked confused and my wife started to smile at me cause she knew just like me that she was giving us a bold face lie.

After I explained to the salesperson about the key lock she began apologizing profusely. BUSTED!

So I believe that Japanese consumers are keen to the problem with warranty battles. It's us against them.

4 ( +5 / -1 )

"They can't even afford the several hundreds of thousands of yen needed to attend the obligatory driving schools in order to prep for a driver's license."

I learned for free in high school and of course driving around with my Dad.

-1 ( +3 / -4 )

Although falling crude and retail gasoline price may give Japanese consumers a break at the pump, the saving which is equivalent to a small cut of tax may not necessarily translate into an attractive incentive to entice new vehicle purchases. In part, it could be blame for the aging demographics and higher cost to own a car in Japan, however I believe that main reason is because consumers in Japan are lack of confidence for their financial future.

When a considerable portion of population do not see their earning power to grow in next few years down on the road , then why should they take the risk to buy a big ticket items such as a car that may require to carry an auto loan ?

So far, Japanese middle class has not benefited much from Abenomics, there is little chance they will.

Nevertheless, if history is any guide , Japanese consumer could rush to buy cars right before next consumption tax hike slated in 2017 as a way to hedge for the saving. Until then, improving auto sales in Japan would be a tough nut to crack.

3 ( +3 / -0 )

Abenomics measures where made for them. Yet, they find how to complain, just to make sure they will not have to rise the salaries as Abe wants to.

Really? You seem not to understand that large car companies are made up of separate divisions, overseas and domestic. If you go to America you will see many Japanese cars, but most of these "Japanese" cars are built in American factories by American workers. The profits these American/Japanese divisions make is generally reinvested in America, and not returned to Japan. The overall sales and profits of the company may look good, but those profits tend to stay in the regions where they are generated, hence Toyota worldwide sales see strong profits, while Toyota Japan loses $6 billion or so in 2014.

0 ( +4 / -4 )

sangetsu, have you ever tried to get back into Tokyo on the tomei or the chuo on sunday afternoons ? Traffic is often backed up for 30 k's with people coming back to the city from weekend travel to the country side.

The govt has been talking about reducing car tax since last year, so that kinda negates a lot of what is being said.

0 ( +1 / -1 )

unexpectedly weak domestic sales revealing the failure of government stimulus policies

Unexpected by whom? An eight-year-old could have predicted this.

0 ( +4 / -4 )

So it appears that Sony is not the only Japanese corporation run by morons.

1 ( +3 / -2 )

Most of the Japanese cars nowadays looks all the same, tasteless cube or dreamless piece of rectangular. Maybe first they should start to design cars that make you want to buy one, second the Govt is currently making people poorer or with less power to buy things so no surprise cars are selling less. The current devaluation of the YEN is going to bring the country on their knees, because what we get at the end, is more useless yen against foreign currencies.

2 ( +4 / -1 )

We live in the city centre so have no need, or desire for a car. Other factors that make car owning unattractive include: endless traffic lights, having to pay almost everywhere you park, horrendously expensive motorway tolls and traffic in the city that moves slower than my bicycle.

People in the countryside might need a car, but the rural population is declining. The youth, on their part-time, temporary, contracts don't have the money and are more interested in their telephones.

3 ( +3 / -0 )

in a couple of weeks, the news will report about 50km traffic jams as motorists, who must pay highway tolls for the privilege, try to reach their destinations. And they wonder why fewer people want to own a car?

2 ( +3 / -1 )

sangetsu, have you ever tried to get back into Tokyo on the tomei or the chuo on sunday afternoons ? Traffic is often backed up for 30 k's with people coming back to the city from weekend travel to the country side.

Been there and done that, bu thent Tokyo is the largest city in the country. There are other large cities all around Japan which are not as congested at the weeknds.

-2 ( +1 / -3 )

A car is really is for the very wealthy people with either a large single income or in a dual income family....

-1 ( +1 / -2 )

So the government must be glad that they are trying to get rid of the kei car and force Japan's automakers to supply bigger international sized cars the locals dont want or need.

-1 ( +0 / -1 )

the failure of government stimulus policies

No - this guy must be kidding, right?

1 ( +1 / -0 )

Good comments above. The consumption tax doesn't help either.

0 ( +1 / -1 )

5 out of 8 big auto makers in Japan posted record profits in quarter ending 9/14. Ask the Chairman if Abenomics should be stopped, he'd be singing a different tune.

1 ( +4 / -3 )

sangetsu03 your statement here

Lastly, most of Japan is not urban, it is rural, and to get around people need cars. By increasing the cost of owning and operating a car, people tend to go out and drive less, and drive for shorter distances. This means that they don't travel to neighbouring towns and for shopping, or weekend holidays, etc. And people in the suburbs tend not to venture out far, so the outlying towns and places in the countryside get few city visitors who spend money during their visits.

Is completely wrong, as 30 k traffic jams on weekends heading back in to Tokyo suggest that for sure you are incorrect again.

1 ( +1 / -0 )

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