Toyota Motor Corp. and Nissan Motor Co., Japan's largest and third-largest carmakers, led a rise in domestic output last month, as overseas demand boosted exports.
The country's 12 automakers boosted their combined output 6.8 percent to 924,897 vehicles in May, the Japan Automobile Manufacturers Association said in a statement Friday. Exports climbed 10 percent to 528,617.
Growth in emerging markets is offsetting slowing sales at home and in the United States, where record gasoline prices and job cuts are hurting demand.
Sales of Japanese cars in China and India, the world's two fastest-growing major economies, will rise at least 10 percent a year on average through 2010, said CSM Worldwide, an industry consultant.
"Gasoline prices are not as much a factor in emerging markets, particularly China, because of growing wealth," said CSM's Tokyo-based analyst Yokoi Hirofumi. "Midsize and large cars continue to sell well" in these emerging markets, he said.
China's economic growth has caused vehicle sales to almost quadruple in the past eight years to 8.79 million units in 2007, making the country the world's second-largest vehicle market. India's car sales have doubled in the past five years to a record 1.2 million last fiscal year.
Toyota boosted domestic output 2.7 percent to 331,597 units.