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Asian brands struggling in Japan market

Car, truck sales fell in April for 22nd straight month as population ages, culture changes.




Yoshikazu Tsuno / Getty Images

In the Japanese fiscal year ended March 31, car and truck sales sank to 3.59 million units, the lowest in 29 years.

Just about everyone struggled last month in the U.S. auto market. Detroit's automakers lost another sliver of market share. Unusually, so did the hard-charging Asian car brands, as high fuel prices and worries about the economy sapped consumer demand.

But the weakness in the U.S. market is nothing compared with the difficulties automakers face in Japan, where new car and truck sales fell in April for the 22nd month in a row.

In the Japanese fiscal year ended on March 31, sales of cars and trucks -- excluding minivehicles -- sank to 3.59 million units, the lowest annual total in 29 years.

The main reasons for the market's collapse are demographic: Japan's population is grayer than most, and it has started to shrink. "We're pessimistic about the market," said Nissan Motor Co. spokesman Simon Sproule. "People just aren't buying cars."

Changes in the culture have also lowered demand. Japanese now keep their cars longer, and young Japanese are less inclined than their parents were to buy an expensive car to demonstrate that they've "made it," said David Iida, a spokesman for Honda Motor Co. "There's been a change in the mentality."

Detroit's automakers barely compete in Japan -- General Motors Corp. recently sold its stakes in Japanese automakers -- but the situation affects them directly. If the Japanese had better growth prospects at home, they might not be pursuing American customers as doggedly as they are.

Toyota Motor Corp. has probably invested more in the new Tundra pickup than in any other single vehicle, although it will sell the truck only in North America.

Leading Japanese carmakers are also expanding in Latin America and southeast Asia, but they will continue to rely on the U.S. market for the bulk of their profits, analysts say. In recent years, earnings in North America have accounted for 50 to 60 percent of their total profits.

Japan's automakers are also competing more aggressively in Europe -- a trend likely to pile more pressure on GM's and Ford Motor Co.'s European operations.

There's little in the sales figures to suggest any improvement in the near future in Japan. Car and truck sales fell 10.2 percent in April to 217,911 units, the second consecutive double-digit monthly decline. Even sales of minivehicles, one of the few robust segments in the market, dropped last month for the first time in more than a year. Sales of minis -- vehicles with engines no larger than 660 cc -- were down 6.4 percent at 139,779 units.

As the Japanese look to make up sales abroad, the yen's weakness against the dollar and the euro are helping them temporarily. Deutsche Bank analyst Gaetan Toulemonde estimates that of Japan's 4 million vehicle exports, 1.7 million are headed to North America and 1 million to Europe.
 
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