Expectedly, Japan’s April car sales are down, but not as much as feared – yet. Tiny kei cars continue to grow

athonda_picture_courtesy_Bertel_Schmitt

Not to anyone’s big surprise, vehicle sales in Japan were down in April. Japan’s sales tax rate rose from 5% to 8% on April 1. In the months before, there was a run on big ticket items. Anyone considering the acquisition of a car did so in the first three months of the year, causing overall sales to rise nearly 21 percent in the first three months. Now for the post-party hangover: Overall registrations were down 5.5 percent in April, and that’s probably just the beginning.

The relatively benign slowdown has its roots in how these numbers are generated. They are registrations. Most cars in Japan are built-to-order, with typically a month delay between order and delivery. Market observers think that future months may be worse. This until the pull-forward effect is digested. Including the weak April, Japan’s year-to-date auto sales are up 12.4 percent, giving room for further corrections.

Interestingly, the market for minivehicles, or “kei” cars, still continues to boom. Minivehicles were leading the market in the months before. The kei segment saw nearly 3 percent growth in April. The market share of kei cars stood at 45.3 percent in April. If this trend continues, soon half of the motor vehicles sold in Japan will be 0.6 liter putt-putts.

A full table of Japan’s motor vehicle sales in April 2014 can be found here.