Firms ramp up production ahead of consumer binge before tax hike

JIJI

The nation’s manufacturers have boosted production in anticipation of a consumer binge ahead of the April 1 consumption tax hike.

Since automakers and electronics firms are already seeing last-minute demand before the tax climbs to 8 percent from 5 percent, companies are taking all possible measures to raise output.

Still, the growth in demand is not boosting regular employment or private-sector investment because manufacturers are cautious about the risk of substantially increasing inventories that could quickly become dated right after the tax hike.

“When a mountain is higher, a valley becomes deeper,” a senior official at a major automaker said, referring to the falloff expected after the first stage of the levy hits.

Cosmetics maker Kose Corp. expects last-minute demand for relatively high-priced lotions, emulsions and shampoos.

Household goods maker S.T. Corp. is cranking up moth repellent production two months ahead of schedule. The products usually sell briskly in April and May, when consumers start packing away their winter clothes.

Kikkoman Corp. forecasts sales of soy sauce will grow some 10 percent ahead of the tax hike compared with other years. It plans to increase production because soy sauce keeps well and is used daily.

Kirin Brewery Co. plans to boost production of its mainstay Ichiban Shibori beer by 20 percent in March compared with the previous year. Likewise, Japan Tobacco Inc. expects smokers to stock up on cigarettes to avoid the price hike it is planning to pass on the costs of the consumption tax hike.

An official at electronics retailer Bic Camera Inc. said: “Last-minute purchases have already been seen for such items as refrigerators, washing machines and television sets.”

In the October-December quarter of 2013, Sharp Corp. saw sales of large refrigerators with capacities of at least 500 liters more than double from a year earlier. Panasonic Corp. moved to expand production of refrigerators and washing machines as retailers prepare for last-minute demand.

Such demand was notably brisk for vehicles, as well.

“Many customers are asking whether it is possible to deliver a vehicle by the end of March,” according to an official at Fuji Heavy Industries Ltd. .