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Japan auto lobby sounds alarm over weak domestic sales

Thursday, December 18, 2014 - 15:19
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The head of Japan's auto lobby on Thursday said a "sense of crisis" hung over the industry, with unexpectedly weak domestic sales revealing the failure of government stimulus policies and currency turmoil hitting key export markets.

[TOKYO] The head of Japan's auto lobby on Thursday said a "sense of crisis" hung over the industry, with unexpectedly weak domestic sales revealing the failure of government stimulus policies and currency turmoil hitting key export markets.

Japan Automobile Manufacturers Association (JAMA) Chairman Fumihiko Ike said an April sales tax hike was only partly to blame for the domestic sales weakness, citing the government's failure to boost consumption. "We are seeing continued weakness in domestic new car sales that go beyond a backlash to the April sales tax hike," he said, adding that new car sales were down by double digits after the tax hike.

Both Toyota Motor Corp and Honda Motor Co cut their domestic vehicle sales targets when they announced their second-quarter results in November and October respectively.

Mr Ike, who also serves as Honda chairman, said Prime Minister Shinzo Abe's stimulus policies - known as Abenomics and designed to end years of deflation - had failed to encourage spending on big-ticket items like cars. "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.

Ike also said plunging emerging-market currencies were having an "undeniable" impact on Japan's auto sector.

Automakers could be hit hard by the erosion of purchasing power in key emerging markets, such as Russia, where the rouble dived as much as 20 per cent against the dollar earlier this week and is down by some 50 per cent against the US currency so far this year.

Asian automakers see Russia as a particularly attractive market, and the currency volatility struck just as they were ramping up their presence in the country.

Mr Ike also said automakers were beginning to talk unofficially about whether the inflators in Takata Corp air bags - blamed for five deaths in the United States and Malaysia - should be replaced after a certain number of years.

More than 20 million cars carrying Takata's potentially defective air bags have so far been recalled worldwide. The cars are mainly older models equipped with inflators made in the early 2000s by Takata. "Right now we are working to stop this (problem) from spreading further around the world, but unofficially we have started talking about that issue," Mr Ike said.

REUTERS