Japan’s January car sales best since 1997 – will deflate when new taxes kick in

Honda HQ in Tokyo

Honda HQ in Tokyo

Auto sales in Japan surged 29.4 percent year-on-year as consumers race to lock-in lower taxes. In April, the country’s sales tax rate will go to 8 percent from 5 percent, causing a boomlet as purchases of high ticket items such as cars, houses, and jewelry are pulled forward.

Sales of regular cars grew 27.5 percent, while sales of mini vehicles rose 32.1 percent. The share of mini vehicles, or “kei” cars now stands at 41.1 percent, up from 40.2 percent in January 2013. Honda is the winner among Japan’s Big Three.  New popular models – Honda’s Fit topped Japanese sales charts since October 2013 – caused Honda’s regular vehicle sales to more than double in January, while its kei car sales grew 21.3 percent.  Honda’s share of the Japanese market rose nearly 4 percent to 18.4 percent from 14.5 percent in January 2013. Nissan and Toyota saw slight losses in market share.

According to Kyodo News, Japanese new car sales in January were highest since 1997. Carmakers prepare for a steep drop in car sales beginning in April as a result of the higher taxes.

Note: Many news outlets report sales of regular vehicles only, because the Japan Automobile Dealers Association is usually first with regular vehicle data. Having 40 percent of the market, kei cars cannot be ignored.  As a service to its readers, Daily Kanban consolidates kei and regular cars each month to provide a better view of the market and the performance of its players.  The complete table of January JDM car sales is here.