By on June 5, 2012

The Japanese car market that has been on a multi-month winning streak could be slowing down quite soon. The reason: The record run on new cars also ran down the government’s subsidy budget in record time. The Japanese government currently is paying a bounty to everybody who buys an environmentally friendly (read: most of them) new car. Thought to last through September, the subsidy-kitty now is expected to be empty by the end of July, The Nikkei [sub] reports.

Market observers expect a surge in the month before the program ends, followed by a lean period, due to pull-forward sales. “There will be a reverse impact to some degree” Akio Toyoda, CEO of Toyota, had said recently. Automakers are expected to soften the blow with generous incentives.

On paper, the effect will initially be masked by the low base caused by the March 11 tsunami. Later into the year, the market could be in the reds even when compared with 2011.

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