Japan's new car sales mark first rise in seven years

TOKYO: New vehicle sales in Japan last year rose 10.6 per cent from 2009, the first annual gain in seven years, thanks to government subsidies for green cars, an industry group said on Wednesday.

However December sales tumbled almost a third as the subsidies, introduced by the government to boost the industry in the aftermath of the global downturn, came to an end.

The number of new cars, trucks and buses excluding mini vehicles sold in the country last year came to 3,229,716 units, up from 2,921,085 the previous year, according to the Japanese Automobile Dealers Association.

It said the gain was mainly due to the popular subsidy to encourage motorists to buy eco-friendly cars, which lifted demand and tempered the crippling effects of the financial crisis.

But last month new vehicle sales dropped 28.3 per cent from a year earlier to 179,666, the fourth straight month with a year-on-year drop as subsidies ended in early September, the association said.

The end of the scheme dealt a blow to automakers, which are already struggling to cope with the yen's strength against other major currencies, forcing them to scale back production.

A strong yen erodes exporters' incomes when repatriated while making their products more expensive and less competitive abroad.