Japan vehicle sales may rise 4.1% in 2010 with subsidies

Sales in 2010 may total 4.8 million vehicles, the Japan Automobile Manufacturers Association said in a statement in Tokyo Friday. The group estimates this year's demand will be 4.61 million units, down from 5.08 million in 2008. Sales in fiscal 2009, ending March 31, may total 4.86 million.

Japan's auto sales have recovered since September after the government began offering rebates for fuel-efficient vehicles as part of an economic stimulus package, causing Toyota Motor Corp. and Honda Motor Co. to raise their domestic sales forecasts for the fiscal year ending March 31. Earlier this month, the government decided to extend the rebate program, which was set to expire in March, by six months.

“With the stimulus extension, Japan's car market will be able to avoid a plunge next year,” said Mamoru Kato, an analyst at Tokai Tokyo Research Center in Nagoya, Japan.

Domestic sales this fiscal year may still be the worst in three decades as Japan struggles to sustain a recovery from its worst postwar recession. Wages fell for a 17th straight month in October, and a report due tomorrow may show the unemployment rate rose to 5.2 percent from 5.1 percent in October, according to a Bloomberg survey.

Under the stimulus program started in June, consumers can apply for a rebate of as much as 250,000 yen (US$2,700) if they scrap an old car to buy a new, more fuel-efficient model. The subsidies are available retroactively for purchases from April 10.

Electric, hybrid, natural-gas, and some diesel vehicles also qualify for an exemption from the country's weight and purchase taxes.

The incentives helped boost sales in 2009 by about 600,000 vehicles and may increase sales by about 900,000 next year, the automakers association said Friday.

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