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Japan's Carmakers Place Their Hopes on the State

Japan’s car industry is not doing any better than the rest of the world’s. Not only is the domestic market collapsing but the US demand for Japanese cars has also plummeted. Japanese carmakers are hoping the government will help them solve their problems. A car-scrapping incentive programme could bring some relief.

Toyota's hybrid Prius model has given the company a green gloss but losses are predicted nonetheless

Toyota's hybrid Prius model has given the company a green gloss but losses are predicted nonetheless

Hiroki Mochida, the head of research and planning at the Japan Automobile Manufacturers Association (JAMA) is pleased that the government has decided to do more to help out the Japanese car industry.

"In April, the automobile acquisition tax was reduced and so was the tax on engine capacity. We estimate that 310,000 more cars will be sold this year because of these reductions,“ he says.

At Honda, Mitsubishi and Toyota, management is also banking on state measures such as a recently-introduced car-scrapping subsidy incentive programme. Anyone who buys a brand new, environmentally-friendly car and scraps an old one will get up to 250,000 yen (approx. 1,800 euros) from the state.

State measures to fight sales slump

Looking at the slump in sales, such state measures seem to be the best bet right now. 31 percent fewer cars were sold in March than in the same month last year. In the US, the most important foreign market for Japanese cars, the numbers were down by 37 percent.

At a press conference at the end of the year, the CEO of Toyota Motors, Katsuaki Watanabe, painted a bleak picture and refused to give figures for the coming year: “The world is experiencing drastic changes. The economic environment is extremely difficult at the moment. We’ve never faced such an emergency situation.”

The situation has only got worse and now it is clear Toyota will make losses for a second year running. This is despite the success of the company’s hybrid Prius model, which has given Toyota a green gloss.

"The trend for environmentally-friendly vehicles will remain even if oil prices have stabilised,” says Hiroki Mochida from the Japan Automobile Association. “But there are so many different options: Hybrid cars, electric cars, hydrogen-powered engines. Each carmaker is trying to find the best way of implementing change as fast as possible and at a reasonable price“.

No counting on the young generation

Mitsubishi was one of the pioneers of electric cars. After a tough period, it chose to focus mainly on small cars and to branch out to a wider market. But now the company is suffering just as much as all the other Japanese carmakers.

If demand does not rise in the US, Europe, China and Japan, the situation will not improve. Moreover, Japan’s carmakers cannot count on the young generation.

"Last year, Japan’s automobile association questioned students to find out what young people think of cars, the environment and energy efficiency,” explains Mochida. “The results were clear. Young people think the environment is very important.“

The study also showed that young people had less and less interest in owning a car, especially in the country’s metropolitan centres.

  • Date 17.04.2009
  • Author DW Staff 17/04/09
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  • Permalink http://p.dw.com/p/LsJ8
  • Date 17.04.2009
  • Author DW Staff 17/04/09
  • Print Print this page
  • Permalink http://p.dw.com/p/LsJ8