Japan carmakers expect domestic demand rebound

Japan’s automakers expect domestic sales to rebound next year as the country recovers from the March 11 earthquake and the government extends tax breaks and introduces subsidies.

Demand for cars, trucks, and buses in Japan may grow by about 900,000 units in 2012 after a record 14 per cent drop this year, Toshiyuki Shiga, chairman of the Japan Automobile Manufacturers Association, said today. “We expect car sales to grow at the 2009 pace, when tax cuts and subsidies were introduced.”

Japan’s biggest postwar disaster and Thailand’s worst floods in almost 70 years disrupted production at Japan’s automakers this year, leading Toyota Motor Corp to cut its profit forecast by more than half. The auto association didn’t give a total sales forecast for next year.

Domestic demand this year is expected to decline to 4.25 million units from 4.95 million units in 2010, the association estimates.

Japan’s government will allocate ¥300 billion ($3.8bn) for the auto incentives as part of a fourth post- earthquake budget, according to the trade ministry. The subsidies will apply to environmentally friendly cars registered from today, if the supplementary budget is passed.

Industrywide vehicle sales in China may increase this year by “about 7 to 8 per cent,” said Shiga, who is also chief operating officer at Nissan Motor Co, Japan’s second-biggest carmaker.