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New auto sales down 7.1% in December, 7.6% in 2007

January 7, 2008
By Ken Worsley


High gasoline prices, a lack of exciting new products, increasing urbanization and an aging population are a dangerous combination of factors when one talks about new automobile sales. How dangerous? In 2007, new car, truck and bus sales in Japan dipped to their lowest level since 1972, sinking by 7.6 percent to 3,433,829 units (not including mini-vehicles).

Sales of trucks fell 17.6 percent and sales of buses declined 11.3 percent.

After the rises seen in October and November, overall vehicle sales slipped 7.1 percent to 236,142 vehicles in December.

Japan’s market for new cars peaked in - you guessed it - 1990 at 5,975,000 units. Since then it has been on the decline, though some years have been better than others. What must be troubling to those who seek to sell more cars in Japan is that 2007 was the fourth consecutive year of decline.

According to data released by the Japan Automobile Dealers Association, Mitsubishi was the only automaker to post an increase in sales last year, with a 7.3 percent increase. Market leader Toyota saw a 6.2 percent drop in sales.

The first quarter of 2007 might look bleak for new auto sales in Japan, and it pays to remember that the January-March quarter almost always sees the highest sales figures in Japan, with March showing the highest monthly totals year after year. With March being such a key time for new auto sales in Japan, the oil price risk becomes more obvious: We have a hard time seeing sales rise in the first quarter year-on-year if oil continues to hover anywhere near its current price. Perhaps more correctly, if gasoline stays at 149-150 yen per liter.

In fact, in the last decade, first quarter sales of new autos have only risen three times: in 2001, 2003 and just barely in 2004. Just over 30% of cars sold in 2007 were done so in the first quarter, and it was the first time in the past decade that March sales slipped under the 500,000 unit mark. At 487,737 units in March 2007, we see a continual slide from the 658,997 units that were moved in March 1998.

And minicars? Their sales fell for the first time in four years, by 5.1% to 1,919,816 units. We seem to remember just about a year ago when auto industry people were blaming lower car sales on 1) Brisk sales of minicars, and 2) High cellular phone bills.

If there’s any chance of automakers seeing higher sales in Japan (and there might not be), they’re going to have to figure out why they’re not selling rather than reaching into a hat to and issuing make-believe reasons.

Filed Under Automotive, Business, Economic Reports 

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Comments

7 Responses to “New auto sales down 7.1% in December, 7.6% in 2007”

  1. Kevin on January 8th, 2008 4:41 am

    Yep, about what I’d expect. I’d said before that I thought the sales increases of October and November were one-offs (a two-off?) due to a spate of new model introductions, and then the extra registration day in November.

    I’m inclined to think the market will keep falling at least 3-4% pretty much forever (why not?). In think it would be newsworthy if that DOESN’T happen.

  2. BillyBuck on January 8th, 2008 5:21 am

    Yes..but think about the glorious export of cars. Japan can provide the world with cars for allmost free, or at least exrtremely cheap, due to the super weak yen.
    That’s so nice!
    That could risie at least 3-4% pretty much forever (why not?). In think it would be newsworthy if that DOESN’T happen.
    hehe.. ;)

  3. Kevin on January 8th, 2008 8:52 am

    I don’t disagree with THAT Billy, I need somebody to make my next Honda for me (although they might run out of workers someday).

  4. WG on January 8th, 2008 10:11 am

    What’s the birth rate amongst the foreign laborers?

  5. Contrarian on January 9th, 2008 12:39 pm

    Exactly WG. My old roommate from college is an engineer for Honda in Marysville, Ohio. They have a big motorcycle plant and they make Civics and Acuras there. I think Honda has a 300,000 vehicle/year plant going up somewhere else in the midwest (Indiana?). When I researched Honda a in 05 or 06, it seems like there are plants in Canada and Alabama (that I can remember off the top of my head). I think that Honda has largely addressed the demographic problems of Japan. Now if they could just adapt the management…

  6. Ken Worsley on January 9th, 2008 5:13 pm

    I’m inclined to think the market will keep falling at least 3-4% pretty much forever (why not?). In think it would be newsworthy if that DOESN’T happen.

    Domestic sales, I agree. There’s not much positive pressure on the market.

    BillyBuck, at some point there’s a limit with how many units Japan can sell globally; it simply isn’t possible for sales to increase forever. The ceiling is probably well above what it is now, but greater profit will have to come from efficiency gains or added value (real or perceived) at some point in the future.

  7. BillyBuck on January 9th, 2008 8:31 pm

    Ken, I agree. But if the if the ceiling is well above what it is now, and if they will make bigger profits from efficiency gains and, or together with added value… where do the money go (yen) ??
    I think they prefer to give it away to us.. rather then keep it in Japan, for the japanese.
    Japan is nothing more than a sad story..

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