• Kyodo

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New vehicle sales in fiscal 2016 are expected to rise 6.5 percent more than estimated for the current year to 5.26 million units for the first rebound in three years, an industry body said Thursday.

The rebound, however, is being projected on a surge in demand before the second stage of the consumption tax hike in April 2017, which will complete its doubling to 10 percent.

For fiscal 2015 ending March 31, the Japan Automobile Manufacturers Association is forecasting a drop in sales of 6.8 percent from the previous year to 4.94 million units, which will take it below the 5 million mark for the first time in four years.

For fiscal 2016 starting April 1, sales of both minicars and vehicles excluding minicars are expected to exceed fiscal 2015 levels.

Sales of minicars with engine displacement of up to 660 cc recently took a beating from a hike in the light vehicle motor tax but are now projected to jump 9.3 percent to 1.55 million units in fiscal 2016. Sales of vehicles excluding minicars are forecast to rise 5.5 percent to 2.84 million units, JAMA said.

“Because the increase in rate is 2 percentage points, last-minute demand will not be as strong as the previous tax hike,” JAMA Chairman Fumihiko Ike said in reference to the doubling of the consumption tax to 10 percent.

The consumption tax was raised to 8 percent from 5 percent in April 2014.

Car sales are expected to gain 6.8 percent to 4.39 million units in fiscal 2016 and truck sales are likely to gain 4.9 percent to 855,000 units. Sales of buses are projected to rise 4.3 percent to 14,400 units.

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