The Japan Automobile Manufacturers Association has asked the government to introduce a tax incentive to encourage consumers to replace their old cars to stimulate domestic car sales, the industry group said April 16.
JAMA's proposal is similar to incentives implemented in some European countries, including France, Italy and Spain. After introducing such systems, auto sales have increased in those countries, JAMA officials said.
According to the proposal, if a consumer purchased a new car, an equivalent of 7 percent of the new vehicle price should be deducted from income taxes or corporate taxes. The tax deduction, however, should be applied to cases in which vehicles in excess of 10 years old are replaced. The incentive system, as a means of stimulating the auto market, should last for only two years, JAMA said.
In Japan, about 6.7 million vehicles, or 10 percent of the total number of autos in the market, are believed to be more than 10 years old. Despite industry expectations that auto sales will post an increase in April from a year earlier, JAMA Chairman Yoshifumi Tsuji told reporters that sales this month so far show an 8 percent decline from the figure posted in April 1997.
Due to the consumption tax increase last April, auto sales that month plunged 15 percent from April 1996, and this year's figure is expected to be worse than the last year's level, Tsuji said. "I cannot predict how much auto sales for this month will be, but I think it would be the same level as last year at best," he said.