Japan car sales rocket 40% on subsidy boost

TOKYO (AFP) -- Japanese automobile sales rocketed more than 40 percent in January after the government restored subsidies for eco-friendly vehicles.

Sales of vehicles with engine sizes above 660cc stood at 263,267 in January, up 40.7 percent on the previous year, the Japan Automobile Dealers Association said.

The figure includes larger vehicles such as lorries and buses as well as cars.

January was the first complete month of sales after Tokyo re-introduced subsidies for eco-friendly vehicles that can cut thousands of dollars from their price tags, in a move aimed at boosting the automobile industry.

Toyota was the biggest overall beneficiary of the move, selling 124,633 vehicles, up 47.1 percent on the previous year, but Honda and Isuzu sales went up proportionately even more, at 59.2 percent and 60.6 percent respectively.

During 2011 Japanese automakers suffered major blows from the country’s earthquake and tsunami and flooding in Thailand, which both badly disrupted their supply chains, leading to Toyota losing its global number one spot.

The subsidy measure last ran from June 2009 to September 2010, during which it cost the government $7 billion.

To some extent the subsidies appear to distort the market and the timing of purchases, rather than necessarily creating extra demand. Sales in January 2011, after the last program ended, were down 21.5 percent on those of January 2010, when it was still in place.