Sky To Fall Down In Japan

Bertel Schmitt
by Bertel Schmitt

Everybody in the Japanese auto biz (and who’s not in the auto biz in Japan, except my friends who, but that’s for another day), everybody in the Japanese auto biz has their eye on the sky. Why? Because the sky is soon to drop. On September 30, government subsidies for purchases of “environmentally friendly vehicles” (read pretty much any new vehicle that passes Japanese rules) will expire. Everybody expects a mad dash in August and September, and in October: Whammo. Down comes the sky.

This is a real one for the pull-forward theorists. In Japan, you can trade in your clunker (MY 1996 or older) for a $2,800 bounty. But as no self-respecting Nipponese owns a clunker (according to lore, all used cars get shipped to North Korea), the government gives you $1,132 merely for buying a car. All this will end on October 1, and blood will be in the streets. Anybody who possibly could be thinking of buying a car in Japan does that before October 1.

Japanese automakers are busy scaling back their output in anticipation of the big skydrop. Honda will scale back production 10 percent at one of its main Japanese factories from October, says The Nikkei [sub].

Honda thinks monthly domestic vehicle sales will crater by 30-40 percent once the government largesse dries up. Their will most certainly be further production cuts, at Honda and elsewhere. Honda is the only one taking about it so far.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • Norma Norma on Aug 09, 2010

    "Their will most certainly be further production cuts, at Honda and elsewhere. Honda is the only one taking about it so far." Really? A quick search in the net returns a couple of reports saying Toyota plans to cut production in October, back in July 2010. RSS @ TTAC....., wake up, wake up, are you still working?

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