01.08.08
Japan’s Consumer Still Reluctant to Spend
Mark Fuller and John Beck posit in their book “Japan’s Business Renaissance” that Japan’s economy turned a corner the early part of this decade thanks to business restructuring and increased willingness of consumers to spend. Certainly the prime example of restructuring is the automove industry with innovative leaders like Toyota (now number two worldwide) and Honda. The Japanese automakers have done well in creating new products and being at the forefront of clean technologies like hybrids and fuel efficient cars. The innovation has not paid off in stimulating greater purchases by Japanese consumers. Today the AP carried the following story:
TOKYO (AP) — Japan’s domestic auto sales fell to a 35-year low last year as the nation faced high gasoline prices, limited income growth and shrinking demand, an industry group said Monday.
Sales of new cars, trucks and buses declined 7.6 percent to 3.434 million vehicles in 2007, the Japan Automobile Dealers’ Association said in a statement. The figures do not include sales of minicars and minitrucks.
The result, which marked the fourth straight annual decline, was the lowest since 1972, when sales totaled 3.406 million vehicles.
The data showed that the world’s third-biggest auto market is slow to respond to efforts by some Japanese car makers to spark local demand by boosting their offerings of new models. Japan’s largest automaker, Toyota Motor Corp has introduced nine models since last May but estimates a 6 percent drop in its domestic sales in 2007.
The nation’s new vehicles sales in December alone fell 7.1 percent from a year ago to 236,142 vehicles, down for the first time in three months, the association said. And the outlook for the domestic market remains gloomy.
Another industry group, Japan Automobile Manufacturers Association, has put its domestic sales forecast for this year at 3.427 million vehicles – excluding minivehicles – down 0.2 percent from sales for 2007.
Clearly the Japanese consumer, unlike its US consumer, is not willing to spend. The stagnant will reinforce the strategies of Japanese car makers to expand internationally and to pressure for a weaker Yen versus the dollar. In any event, Japan’s economy remains tied to export success given the weakness of internal demand.
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