TOKYO (Bloomberg) -- Japanese vehicle sales rose for the first time in four quarters, adding to signs of an improving outlook in the world's third-largest economy.
Total deliveries of passenger and commercial vehicles in the quarter ended September rose 2.3 percent from a year earlier to 1.36 million units, according to figures from the Japanese dealers and minicar associations today. In September, sales rose 17 percent, the first gain since April and the biggest increase in 14 months.
While sales shrank 4.8 percent during the first three quarters, deliveries aren't falling as much as the 12 percent drop the Japanese automakers' association predicted for 2013. In other signs of a recovery, rising share prices are enriching investors, the weaker yen is bolstering exporters' profits and a Bank of Japan survey released today showed business confidence among large manufacturers is at its highest level since 2007.
"The biggest force that's been giving domestic auto sales a boost is the improvement in the markets and optimism among consumers," said Mitsushige Akino, chief fund manager at Ichiyoshi Asset Management Co. in Tokyo. "The improvement in the economy and new models will continue to buoy demand."
Last quarter's increase in vehicle deliveries follows declines of 6.1 percent and 9.4 percent in the preceding two quarters, according to data compiled by Bloomberg.
Honda led gains last month with deliveries surging 40 percent. The company began selling its remodeled Fit hatchback to challenge Toyota's lead in hybrid compact cars. Toyota, the world's biggest carmaker, saw domestic sales, excluding minicars, rise 12.5 percent last month. Local deliveries at Nissan climbed 16 percent.
Anticipation that the government will double the sales tax starting from next year helped prompt some consumers to buy cars, Akino said. Though the government is considering offsetting the sales tax increase by cutting auto levies by the same amount, that hasn't been confirmed yet, Akino said.
Prime Minister Shinzo Abe today said he'll go ahead and raise the sales tax for the first time since 1997, starting with an increase to 8 percent in April, as he seeks to rein in the world's biggest debt burden. The sales tax would rise to 10 percent by October 2015, according to the government plan.
That's worried automakers, including Akio Toyoda, president of Toyota and chairman of the Japan Automobile Manufacturers Association, who said in August that increasing sales taxes without cutting vehicle levies would deal a "lethal blow" to the industry.
To relieve carmakers, Japan is poised to abolish the 5 percent automobile acquisition tax, Toshiyuki Uemura, a member of a government panel on vehicle taxation, said in an interview last month.
Auto sales had been falling in the past year after government incentives to buy fuel-efficient vehicles expired.
Those rebates helped deliveries surge 28 percent in 2012. Longer term, vehicle demand in the country had been falling for more than two decades as more Japanese consumers choose to take the subway instead of driving a car.
Japanese automakers are also grappling with a home market that's estimated to face an aging and declining population for decades.
In an effort to reverse declining interest, the heads of Japan's biggest automakers have begun a one-month campaign to promote cars to university students. Toyoda went to Meiji University last week, the presidents of Honda and Subaru-maker Fuji Heavy Industries Ltd. are scheduled to visit schools later this month.