The 39th Tokyo Motor Show opens Saturday, and industry officials are hoping the 16-day extravaganza inspires drivers to loosen their purse strings and buy a new vehicle.

The show will feature about 370 cars and 190 motorcycles, with 38 automakers, 12 motorbike makers and 181 auto parts manufacturers from 14 countries and regions taking part.

"The event is like a huge showroom where you can compare vehicles from different makers at one stop," said Masao Oka, director general of the Tokyo Motor Show section of the Japan Automobile Manufacturers Association.

"Many automakers introduce new models around the time of the motor show (in autumn) in the hope that customers will buy them in the winter bonus season."

But automakers are facing increasingly tough market conditions in Japan.

Domestic demand -- excluding minivehicles with engine displacement of less than 660cc --is expected to remain flat at around 4 million units annually due to the declining birthrate and the mature economy, while consumption is diverging toward two poles -- luxury cars and compacts.

Moreover, although automakers have to rely on new models to stimulate demand, their novelty will not last long, with some industry analysts seeing the impact of new models lasting six months at best.

"Such a phenomenon was observed in the past four to five years, but it is only more recently that the trend has become increasingly prominent," Yasuhiro Matsumoto, a senior credit analyst at BNP Paribas Securities (Japan) Ltd. said, citing technological evolution as a major reason.

The time it takes to develop a new car is getting shorter thanks to rapid advances in computer technology. This is allowing automakers to launch new models more often, he said.

"Automakers release new models one after another to stimulate demand, but as a result, customers have become accustomed to new vehicles," he said.

To survive the harsh business environment, carmakers "need to raise their profitability by selling high-margin vehicles and lowering production costs for cheaper models," said Koji Endo, director of equity research at Credit Suisse First Boston Securities (Japan) Ltd.

Overall domestic car sales excluding minivehicles during the first half of fiscal 2005 rose 3 percent to 1.88 million from the previous year, according to the Japan Automobile Dealers Association.

The rise was mainly attributed to the success of newly introduced compact cars, such as Toyota Motor Corp.'s Vitz, launched in February, and the Note released in January by Nissan Motor Co.

Although Nissan's Serena minivan and Honda Motor Co.'s Step Wagon also enjoyed brisk sales, most of the 10 best-selling cars in the April-September period were compacts, which have logged year-on-year sales gains for the past 11 months.

The Japan Mini Vehicles Association said domestic minivehicle sales during the first half of fiscal 2005 rose 4.4 percent year-on-year to 916,801 units for the second consecutive half.

Meanwhile, Toyota's Lexus got off to a stellar start, with combined orders for the GS and SC models in the first month reaching 4,600 -- nearly four times the automaker's monthly target.

In the latter half of the fiscal year, automakers plan to launch new or fully revamped minivans and compact cars, which some analysts say will further polarize the market.

"Carmakers create sales volume with (narrow-margin) compacts and minivehicles while earning their profits on high-margin luxury vehicles and minivans," said Matsumoto of BNP Paribas Securities. "That has now become the norm for the automakers' business model in the domestic market."

But the outlook for automakers lacking high-end models or popular minivans is dim in the saturated market, according to Endo of Credit Suisse.

Given the difficulties in the domestic market, Japanese automakers are looking to expand their overseas market share, especially in North America, at the expense of the Big Three -- General Motors Corp., Ford Motor Co. and the Chrysler Group, part of the German-American auto giant DaimlerChrysler AG.

Toyota, Honda and Nissan got their footholds in North America by introducing reasonably priced, fuel-efficient midsize vehicles, which was a weak segment of the market for their U.S. counterparts.

But Japanese firms have gradually boosted market share by expanding their lineups to include high-end models and large vehicles, such as full-size pickup trucks -- long considered a stronghold of the Big Three.

Next is compact cars. Nissan plans to introduce the Versa compact as an entry model next summer, and Honda is planning to launch the Fit next spring on the heels of Toyota's successful Sion series.

With growth in the domestic auto market near to leveling off, Endo said, "Japanese automakers' reliance on overseas markets will increase."