TOKYO -- A raft of new models helped vehicle sales in Japan grow slightly in the business year through March, but industry watchers said demand was likely to stay at low levels until a meaningful economic recovery took hold.
Vehicle sales in Japan, including the cheaper 660 cc minivehicles, rose 0.7 percent in the 12 months to March, totalling 5.868 million units, industry data showed on Tuesday.
The sales figure has stagnated around the six million mark for the past four or five years as a shaky job market has kept personal spending at bay.
"Once the economy recovers, vehicle sales could come back to 6.5 to 6.6 million, but who knows when that will be," said Shigeharu Kimishima, senior analyst at Mitsubishi Securities.
He said the small rise this year was nothing to get excited about because it came off a low base the year before.
Non-mini passenger cars owed their rise to a 10.6 percent jump in sales of cheaper compact cars, which have engine displacements of less than 2000 cc. Sales of regular-sized passenger cars fell 4.1 percent.
The main consolation for carmakers is that the domestic market accounts for less than 10 percent of operating profits at Japanese automakers. With rapid growth in car markets in the rest of Asia, Japanese sales are becoming even less important.
That means laggards like Honda Motor Co. won't feel much pain from a fall in domestic sales, as long as it continues to perform well in the United States. Analysts say that market is about 10 times as important as the home market in profit terms.
Honda, which has fallen behind its rivals in launching new models of late, saw its non-mini sales fall 0.3 percent to 589,811 units last business year. Its minivehicle sales have plunged 22 percent so far this calendar year.
Analysts said the war in Iraq, which many fear could dent U.S. and European auto sales, was unlikely to have a big effect on the Japanese market barring any sharp spike in oil prices.
But they differ over the outlook for Japanese vehicle demand this business year, with Kimishima saying he expected a one to two percent fall in sales, while J.P. Morgan forecasts sales will rise by another three percent to around 6.1 million units.
Non-mini sales at industry leader Toyota Motor Corp. gained 1.6 percent to 1.703 million units, while Nissan Motor Co., ranked number two in domestic sales, scored a 7.7 percent jump to 768,235 units.
Mitsubishi Motors Corp.'s sales, including its unit's trucks, dropped 8.3 percent, while sales at Mazda Motor Corp. fell 0.5 percent.
Minivehicle sales in the just-ended business year fell 1.1 percent to 1.825 million units, down for the third straight year. Non-mini vehicle sales grew 1.6 percent to 4.043 million units after falling 3.4 percent the year before.