New car sales plunge in Japan in October

November 01, 2010 | 15:04

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New vehicle sales in Japan tumbled more than a quarter in October, suffering the steepest year-on-year fall in 18 months as subsidies for green cars ended, an auto industry group said Monday.

Sales of new vehicles, including cars, trucks and buses, totalled 193,258 units in October, down 26.7 per cent from a year earlier, according to monthly data from the Japanese Automobile Dealers Association.

The decline, which followed a 4.1 per cent fall in September, is the biggest fall since a 28.6 per cent drop registered in April 2009. It was also a record fall for the month of October, the association said.

"The biggest reason (for the fall) is that subsidies for green cars ended" in September, an association official said.

In early September, the Japanese government said it had ended a popular subsidy to encourage motorists to buy eco-friendly cars, a measure that had boosted demand in the wake of the crippling effects of the financial crisis.

The end of the scheme has dealt a blow to Japanese automakers, which are struggling to cope with the yen's strength against other major currencies.

A strong yen erodes exporters' incomes when repatriated while making their products more expensive and less competitive abroad.

AFP

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