Motor vehicle sales in Japan are expected to slide this fiscal year to their lowest level in 10 years because the governments tight fiscal policy squeezed consumer spending, an industry group said yesterday. Sales of cars, trucks, buses and minivehicles in Japan for the year to March 31 are expected to fall 13.1 per cent to a total of 6.33 million units, the lowest since the 1987-88 fiscal year, the Japan Automobile Manufacturers Association (Jama) said. Hopeful that recent government stimulus measures would breathe fresh life into the economy, however, Jama predicted the next fiscal year, which begins on April 1, would bring a 7 per cent rise in domestic sales. Jama blamed last Aprils rise in the national sales tax and other fiscal tightening measures for weak vehicle sales over the past year.(Reuters)
Because of a 9 trillion yen ($69.2 billion) rise in the (fiscal) burden on the people, real purchasing power declined, and personal spending and housing investments fell, the association said in a statement.
It also said the Asian financial crisis and bankruptcies at some big Japanese financial firms dampened consumers eagerness to spend.
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Turning to fiscal 1998-99, the report said that while the first half would be dragged down by continued uncertainty about the economy, recently adopted economy-boosting measures such as a one-off personal income tax rebate would spark renewed growth.
With the impact of the rise in the peoples burden having run its course and with measures like the two-trillion yen tax cut, growth in real disposable income will rise and personal spending will begin recovering in the second half of the fiscal year, it said.
Despite a shrinking market at home, however, Japanese vehicle makers enjoyed strong growth in exports, which were expected to rise 19.5 per cent this fiscal year to 4.6 million units. Passenger cars were forecast to put in an especially impressive performance, with growth of more than 23 per cent.
Analysts expect strong exports, combined with a weakening yen, to generate hefty profits for some of Japans big car makers this fiscal year.
Next years export outlook is not so rosy, however.
Although JAMA said there were too many uncertainties to make a credible export forecast for next fiscal year, JAMA chairman Yoshifumi Tsuji told reporters he expected exports to Southeast Asia would fall sharply while other markets would be mostly flat.
Overall, therell be a slight decline (in exports), he predicted.