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Japan minicar sales point to demand recovery

TOKYO: Minivehicle sales in Japan rose 1.8 percent in January from a year earlier, after record sales last year, giving further backing to the view that the worst is over for the nation's automakers.

The Japan Mini Vehicle Association said 125,358 cars and trucks with engines no larger than 660cc were sold last month. A record 1.88 million minivehicles were sold in 1999, accounting for one of every three new vehicles sold here last year.

Combined with previously released sales figures for regular-sized cars and trucks, overall vehicle sales in Japan totalled 373,791 in January, up 2.5 percent from a year earlier, the first year-on-year increase in four months.

"The downtrend in automobile sales has ended," said Masato Ogasawara, an analyst at Daiwa Institute of Research. "Money has started to move, as you see in the Tokyo stock market."

Ogasawara was referring to the Tokyo stock market's benchmark Nikkei 225 average, which briefly topped 20,000 on Friday for the first time in 30 months, signalling an improved corporate business climate in Japan.

On Tuesday, the Japan Automobile Dealers Association said Japanese new car sales, excluding minivehicles, climbed 2.9 percent in January from a year earlier to 248,433 vehicles.

The rise was the first since November, when a 32-month slump was broken with a meagre a 0.2 percent gain.

Foreign car sales also rose last month.

The Japan Automobile Importers' Association said on Friday that sales of foreign makers-made cars rose 4.3 percent from a year earlier to 14,232 units in January, the third successive month of year-on-year increase.

Analysts viewed the latest car sales figures as further evidence that Japanese consumers are finally spending more.

"Japan's automobile sales have got out of the worst period. Several positive factors are seen such as a recovery in corporate earnings, and the Japanese economy and stock market are now in good shape, said Takaki Nakanishi, a vice president of Merrill Lynch in Tokyo.

But he added that a full-fledged recovery in domestic car sales probably is still a year away.

He warned ongoing corporate restructuring at big companies such as automaker Nissan Motor Co and steelmaker NKK Corp could take its toll on the market. -Reuters