Japanese Auto Market Takes Sales Hit As Consumption Tax Increases
The Japanese auto market took a hit in sales last month, falling 5.5 percent to 345,226 units as an increased consumption tax of 8 percent took hold in a sign of a slow year in sales.
Bloomberg reports the drop comes at the end of a seven-month-long sales surge of over 783,000 vehicles through March 2014 ahead of the levy issued by Prime Minister Shinzo Abe to help fight the ongoing financial issues plaguing Japan for two decades. As a result, economists believe Q2 2014 will see the biggest retraction since the 2011 Tōhoku earthquake and tsunami.
As for the outgoing month, Toyota and Mazda both posted their lowest number of deliveries since 2011, while Subaru saw a 41 percent drop to a record low number. Meanwhile, Nissan, Suzuki and Mitsubishi all saw gains in April, with Mitsubishi taking the biggest slice of the market at 27 percent.
The consumption tax will be mitigated somewhat for automotive consumers through a 5 percent vehicle-purchase tax, and will give way in 2015 for a 10 percent national sales tax. In the meantime, the next year could play out like it had in 1997, when the tax jumped from 3 percent to 5 percent and auto sales dropped 15 percent with a 21-month decline in the industry.
I thought there was a Flex sitting in front of the Spike for a second, and I was going to be happy. Course I also read the plate on the Honda as "SPIKO" first, but that'd be offensive.
Caption: "Mommy, why do you always park the car so funny?"
Sales off by 41%? No love for Subaru in that market, apparently. Japan is a densely populated place with excellent public transportation. Its population is both aging and shrinking. I don't see how car sales can do anything but decline in the long term.
Japan has been in an economic slump for over 20 years. If anything Japan should lower the consumption tax. A major problem Japan has that a majority of their population has aged with fewer younger people. Closed immigration and lower birth rates means less workers and thus less taxes which puts a further strain on the taxpayers. For the most part Honda, Toyota, Sony, and other large Japanese corporations are producing most of their products outside of Japan. Toyota and Honda are becoming more US corporations, especially with Toyota consolidating their NA operations in Plano, TX. This is good for the US.