New vehicle sales in Japan fell in May by less than the previous month, as deliveries of minicars such as Honda Motor Co.'s N-Box helped narrow declines prompted by a hike in consumption tax, industry bodies said Monday.
Vehicle deliveries last month dropped 1.2 percent to 363,370, the Japan Automobile Dealers Association and Japan Mini Vehicle Association said. The decline followed a 5.5 percent slump in April. The sales tax hike was the first since 1997.
Carmakers led by Toyota Motor Corp. entered this fiscal year bracing for a yearlong slump in the world's third-biggest car-buying nation, with the Japan Automobile Manufacturers Association forecasting a record 16 percent sales decline for the fiscal year ending in March 2015.
Demand for minicars has climbed from a year earlier for 11 consecutive months, buoying domestic automakers, whose profit forecasts for the fiscal year trailed analysts' estimates.
"Things are not really as bad as people recently expected," Koji Endo, a Tokyo-based analyst at Advanced Research Japan, said. "It's very reasonable to expect a relatively soft market during the first six months" after the sales tax increase.