Japan: New Models Raise Auto Sales

TOKYO, July 1, 2003; Chang-Ran Kim writing for Reuters reported that a flood of new models helped vehicle sales in Japan grow in the first six months of the year, but only slightly, and analysts saw few prospects of higher growth ahead without a pick-up in dormant consumer spending.

Sales of new cars, trucks and buses in Japan including 660cc minivehicles rose 1.4 percent to 3.026 million units in January to June, data released on Tuesday by two industry groups showed.

While more product launches are scheduled later this year -- especially around October to coincide with the Tokyo Motor Show -- it would be tougher for makers to show much growth in the second half of the calendar year since sales in the year-ago period were strong, analysts said.

"It's going to be a tug-of-war between the positive effect of new models and the pullback off last year's high base," said Deutsche Bank auto analyst Tatsuo Yoshida.

"July and August sales will probably be strong, but it may be difficult for sales to rise above last year's levels during the rest of the year."

While the rise in the first half was marginal, analysts noted a marked improvement in the product mix as full-sized cars grew at a brisk pace to offset a drop in sales of cheaper minivehicles, which account for about a third of the market.

First-half sales of non-mini vehicles expanded 3.7 percent to 2.089 million units, the Japan Automobile Dealers Association said, while minivehicle sales contracted 3.5 percent, according to the Japan Mini Vehicle Association.

Of the top five car makers, Mitsubishi Motors Corp posted the biggest growth in non-minivehicle sales, with a jump of 32 percent in the first half as sales rocketed 64 percent last month after the launch in mid-May of the Grandis minivan.

Next in line was fifth-ranked Mazda Motor Corp, with growth of 13 percent, while No. 3 automaker Nissan Motor Co had a rise of 7.5 percent.

Top-ranked Toyota Motor Corp also achieved a healthy rise of 5.3 percent as it continued to roll out new models, including the Harrier luxury sport utility vehicle and Raum family car.

A notable loser was Honda Motor Co, whose six-month sales plunged 20 percent due to a dearth of new offerings.

While analysts expect Honda's sales decline to reverse in October with the launch of its remodelled Odyssey in the popular minivan segment, many new models have flooded that corner of the market, including Nissan's Presage out last week.

Honda's share of the non-minivehicle market dropped to 10.3 percent last month, down 5.9 percentage points from the year before.

But analysts said Honda's weakness in the domestic market is being more than offset by its unmatched strength in the most profitable U.S. market, where its sales continue to mark double-digit gains despite a shrinking overall market.

"We do not see any serious impediments for medium and long-term fundamentals with ongoing healthy results in (Honda's) U.S. and Asian businesses, which are primary sources of growth," UBS auto analyst Takaki Nakanishi wrote in a recent report.

In June alone, Honda's non-mini vehicle sales plunged 35 percent, against an industry-wide rise of 2.6 percent.

Minivehicle sales declined 7.9 percent for the third consecutive month of year-on-year falls.