Nissan Leads Drop as Japan Sales Fall to 34-Year Low

Japan’s fiscal first-half auto sales slumped to the lowest in 34 years as rising unemployment and decade-high inflation sapped demand for new vehicles.

Sales in the six months through September fell 2.9 percent to 1.54 million vehicles, the lowest since 1974, the Japan Automobile Dealers Association said in a statement today. The total excludes minicars. Sales of cars, trucks and buses in September fell 5.3 percent to 310,992 from a year earlier.

Nissan Motor Co.’s sales dropped 5.3 percent in the six- mohth period as rising food and gasoline prices left consumers with less money for large purchases. The drop in domestic demand comes as Japan’s largest manufacturers turned pessimistic about their prospects for the first time in five years as the deepening U.S. financial crisis stifled demand in the country’s export markets.

“Current economic conditions are getting worse, which doesn’t help car sales,” said Yasuhiro Matsumoto, a credit analyst at Shinsei Securities Co. in Tokyo. “Carmakers are coming out with new minicars, the only models that seem to sell.”

The Tankan index of confidence among big makers of cars and electronics slid to minus 3 points in September from 5 in June, a fourth quarterly drop, the Bank of Japan said today in Tokyo. The negative reading means that pessimists outnumbered optimists for the first time since 2003.

Household Spending

Japan’s household spending slumped 4 percent in August, the most since September 2006, as consumer prices excluding fresh food climbed 2.4 percent, matching July’s increase as the fastest since October 1997. The country’s jobless rate climbed to 4.2 percent in August.

Domestic auto sales, including minicars, are forecast to fall 1.2 percent this year to about 5.32 million units, according to the Japan Automobile Manufacturers Association. It would be the fourth straight annual decline.

Production in Japan by the country’s 12 automakers fell 11 percent in August, the biggest drop in more than a decade, after exports to the U.S. declined. The carmakers cut shipments to the U.S. by 20 percent in August, the most in five years.

Toyota, Japan’s biggest carmaker, reported a 6 percent drop to 127,810 vehicles. Honda Motor Co., the country’s second- largest, said its tally rose 12.5 percent on demand for its revamped Fit compact and new Freed minivan. Sales at Nissan, the third-largest automaker, dropped 11.3 percent.

Toyota shares rose 1.8 percent to 4,460 yen at the close of trading on the Tokyo Stock Exchange. Honda gained 1.6 percent to 3,140 yen, and Nissan dropped 0.1 percent to 696 yen.

Toyota’s first-half sales excluding Lexus-brand cars fell 1.8 percent to 693,463 Honda increased sales excluding minicars 12 percent and Nissan sales excluding minicars dropped 5.3 percent in the period.

New Models

Japan’s automakers are betting on new and revamped models to shore up sales as a shrinking population also drags down overall demand.

Daihatsu Motor Co., Japan’s largest minicar maker, unveiled its new Move Conte model in August, and Suzuki Motor Corp., the second-largest, released a revamped WagonR last month. Honda Motor Co. will introduce an updated Life minicar later this year. The 0.66-liter or smaller engines used to power minicars have increased their popularity amid Japan’s 20 percent increase in retail gasoline prices over the past year.

Minicar sales fell 3.3 percent to 165,827 units last month, the Japan Mini Vehicles Association said in a separate release today.

Daihatsu sold 55,322 units, up 5.7 percent, and Suzuki sales rose 1.5 percent to 48,790 units.

Source: Bloomberg

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