Japan cars sales in record plunge

JAPANESE car sales plunged a record 37 per cent last month as both buyer enquiry and showroom stocks dried up in the wake of the island nation’s March 11 earthquake and tsunami.

The dire state of the Japanese car market is set to continue through April, with motor companies still struggling to re-open factories due to parts shortages and rolling electricity blackouts.

As well, demand for products is expected to remain low, with a Bank of Japan survey rating business confidence at an abysmal minus two.

Mazda has started limited production of cars at its Hiroshima and Hofu plants, and Honda expects to begin limited production at its two main Sayama and Suzuka factories from next Monday.

However, the part supply situation remains brittle, with both car-makers cautioning that full-scale production is still some way off.

Said Honda in a statement last week: “Since the component situation remains fluid, production will resume for both automobiles and parts at approximately 50 per cent of the original production plan at the outset.

Left: Toyota president Akio Toyoda.



“Honda will carefully manage the situation and manage its operation accordingly.”

Nissan car assembly plants remain closed this week, while Toyota has only resumed production of hybrid vehicles such as the Prius and Lexus CT200h. Decisions on future production by Nissan, Toyota and other companies are expected before the end of the week.

Japanese domestic car sales had been in decline for six straight months before the March earthquake. Because the earthquake happened more than a week into March, the impact on sales might be far greater than the 37 per cent drop would indicate.

Toyota president Akio Toyoda has warned that the car-maker's earnings will be reduced as a result of disruptions. He declined to say how much profit may be cut.

The Japan Automobile Dealers Association reported 279,389 light vehicle sales in March as the industry recorded its biggest year-on-year sales fall since 1968, when data keeping began.

Toyota led the plunge, down 46 per cent to 110,667 vehicles (excluding Lexus). Nissan’s sales fell by 38 per cent, to 45,700 units, while Honda sales dropped by 28 per cent, to 43,329.

Analysts in Japan predict the earthquake could cost the industry 500,000 vehicles in lost production, with the losses taking weeks to be felt around the world.

The ripples from the parts industry disruption caused by the quake continue to be felt around the world, with Ford the latest to close a factory in the United States, where it brought forward a planned week off for its Louisville truck plant that makes Expedition, Super Duty and Lincoln Navigator models.

So far, no Australian plant has suffered interrupted production, although all three of them rely on at least some parts from Japan.