Tokyo, 27 January 2010 – Vehicle sales in Japan are forecasted to grow 4 percent in 2010 as government stimulus programs continue to prop up demand, according to automotive forecasting firm CSM Worldwide.
“Consumer sentiment remains depressed in Japan, but the new car market entered a recovery phase in the second half of 2009 as the government’s eco-car tax cut policy and scrappage incentive programs gathered momentum,” said Yoshiaki Kawano, Japan/Korea sales forecast analyst. “The government’s recent decision to extend the scrappage program through September, combined with stronger economic fundamentals, will help drive full-year sales modestly higher.”
| Light Vehicle Sales (millions) | 2009 | 2010 |
| Japan | 4.5 | 4.7 |
| YOY % Change | -7.4% | +4.0% |
Momentum in the second half of 2009 was driven by a recovery in the sales of sub-compact and compact cars, especially fuel-efficient vehicles such as the Toyota Prius, Lexus HS and Honda Insight hybrids, and low-emissions vehicles such as the Honda FIT, Honda Freed and Toyota Vitz.
The success of these vehicles in such a difficult market reflects the availability of incentives and the defensive mood of consumers and their growing concerns for the environment. Minicars, by contrast, are eligible for fewer subsidies and have lost momentum in the market – a trend that is expected to continue until the scrappage programs end.
The hardest-hit segment in 2009 was imported vehicles, which account for about 4 percent of total sales, because most of them were not eligible for incentives. Although dealers have tried to address this situation with marketing campaigns and U.S.-built vehicles are now eligible for the scrappage program, import sales are forecasted to remain stagnant.
Production Volumes Start to Recover
The simultaneous collapse of domestic and export demand in 2009 drove a 30 percent decline in production to 7.5 million units. But vehicle production in Japan will begin to recover this year, and should reach 8.6 million units, an increase of 15 percent, according to CSM’s forecast.
Domestic demand will continue to be supported by the scrappage incentive and the eco-car tax break. Export demand, primarily from North America, will recover beginning in the second half of 2010.
“Considering that domestic demand will have little chance to grow to more than 5 million units, Japanese production will still depend highly on exports,” said Masatoshi Nishimoto, Japan/Korea production forecast manager.
| Light Vehicle Production (millions) | 2009 | 2010 |
| Japan | 7.5 | 8.6 |
| YOY % Change | -29.9% | +14.7% |
The recovery in domestic production could be hurt by the large amount of open capacity that exists among the Japanese OEMs in North America.
“In 2009, capacity utilization dropped 50 percent among Japanese OEMs in North America,” said Nishimoto. “We expect that they will utilize their open capacity in North America first to meet local demand.”
Over the next few years, CSM expects to see Japanese OEMs emphasize hybrid and electric vehicles as one way to support domestic production.
In 2012, production of hybrid vehicles (HEVs), which is dominated by Toyota and Honda, is expected to reach 1.5 million units in Japan or about 70 percent of global hybrid production volume.
While Toyota will localize Prius production in the United States and Auris production in Europe, the company’s HEV production volume in Japan will reach one million units in 2012. Over the next few years, Toyota plans to introduce HEVs into a variety of segments, with different body types and price points.
Honda, meanwhile, is developing a new hybrid system in larger vehicles, which will be produced only in Japan.
“We believe it is very important for Honda to be successful in the production of these hybrid vehicles, not only to compete with the Prius in the global market, but also to secure domestic production volume,” said Kawano.
Nissan, Mitsubishi and Fuji Heavy Industries will lead the electric vehicle (EV) market. Nissan in particular will accelerate EV production in 2010 to supply the global market. CSM expects output of the Nissan Leaf to reach 20,000-30,000 units per year through 2012.
“Right now the EV market is facing difficult issues with high-cost batteries, cruising distance and infrastructures, but we expect the EV market to grow in the short term,” said Kawano.
Toyota will have an opportunity to utilize EV technologies from Fuji Heavy Industries. Mitsubishi, meanwhile, has invested its limited resources in EV technology and will supply the i-MiEV electric vehicle to PSA and other OEMs globally.
