Auto sales slide 7.6% in May on minicar tax

Auto sales in May fell 7.6 percent to 335,644 units from a year ago as the April tax hike on minivehicles weighed on demand, industry bodies said Monday.

Minicar sales sank 19.6 percent to 125,755 units, down for the fifth consecutive month, the Japan Light Motor Vehicle and Motorcycle Association said.

Minivehicles, which have engine displacements no larger than 660cc, account for around 40 percent of new car sales in Japan.

Sales of other cars meanwhile rose 1.4 percent to 209,889 units, rising for the second consecutive month, the Japan Automobile Dealers Association said, hinting the impact of the April 2014 consumption tax hike is on the wane.

Demand for cars was sluggish during the fiscal year ended March 31 after the first stage of the doubling of the consumption tax raised the levy by 3 points to 8 percent, tipping Japan into yet another recession. It was the nation’s first tax hike in 17 years. The second stage, which has been delayed, will raise it to 10 percent.

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