Toyota Sales in Japan off 10.5%

Toyota is doing great in the US, but at home in Japan, things are not so good -

Japanese keep wallets closed; March auto sales plunge 7.9%

James B. Treece | Automotive News / April 16, 2007 - 1:00 am

TOKYO -- March is typically Japan's hottest new-car sales month. Not this year.

Light-vehicle sales in Japan in March dropped 7.9 percent compared with last year, to 748,965. That pulled first-quarter sales down 7.7 percent to 1,610,060.

There is little prospect sales will pick up this year.

Japanese consumers have more spending money. They just aren't willing to open their wallets. That means Japanese carmakers will continue to lose money trying to prime a dry pump in Japan, and will have to continue to rely on exports for profits.

How bad is it? The mighty Toyota Motor Corp. supertanker is being pulled along by its Daihatsu Motor Co. tugboat.

Toyota off 10.5%

Sales of Toyota and Lexus vehicles combined fell 9.3 percent in the January-March quarter to 482,346. Toyota-brand sales alone fell 10.5 percent to 470,859. Lexus sales doubled to 11,487 thanks to the launch of the LS 460.

That put Lexus within about 1,000 cars of Mercedes-Benz, whose sales slid 7.6 percent to 12,442. That sounds very close, but in Japan's relatively small luxury segment, 1,000 cars is the approximate equivalent of the first-quarter sales for Jaguar, Land Rover and Aston Martin combined.

Fortunately for the Toyota group, it doesn't have to rely on Lexus to keep overall sales volumes from tanking. Daihatsu, in which Toyota has a 51.1 percent stake, makes 660cc minivehicles -- one of the steadiest segments in Japan's lackluster market. Minis dipped only 1.9 percent in the quarter, to 600,566.

Thanks to a sales push that propelled it past Suzuki Motor Corp. in minivehicle sales, Daihatsu's total sales rose 7.5 percent to 196,227. Diahatsu's March minivehicle sales jumped 11.1 percent to a single-month record of 86,703. Its previous record was 77,693 set in March 2006.

Suzuki has refused to defend its minivehicle sales title with costly incentives. Instead, it boosted sales of larger cars and its profitable exports. Suzuki's first-quarter Japan sales slipped 1.6 percent from 2006, to 207,407.

Nissan Motor Co.'s first-quarter sales fell 10.0 percent to 241,802. Honda Motor Co.'s slid 5.8 percent to 173,543. Mitsubishi Motors Corp.'s dropped 18.5 percent to 76,085. Mazda Motor Corp.'s fell 8.4 percent to 79,058.

In annual union-management wage talks this spring, Japanese workers received wage increases of 1.99 percent, according to preliminary results of a survey by the Japanese Trade Union Confederation. That doesn't sound like much, but coming off years of deflation in Japan, the final figure could be the highest since 2001.

Companies need to offer higher pay to attract workers for three reasons. First, the economy is finally gaining momentum. Second, Japan's chronic low birth rate means fewer young people are entering the work force. Third, an estimated 7 million baby boomers are expected to retire over the next three years.

Still, many college graduates who used to celebrate a new job by buying a car are putting off the purchase this year. One worry is that the government may raise the sales tax on cars sometime next autumn or early next year. So rather than buy now, shoppers are holding off so they can buy just before the tax increase takes effect.