The world's biggest carmaker, Toyota Motor Co, expects a huge production drop in the next year. It announced over the weekend that all temporary workers were being laid off.
AFP - Sales of new vehicles in Japan plunged last month, figures showed Monday, underlining the industry's deepening woes as the economic downturn causes a slump in consumer spending.
Toyota Motor, the world's biggest automaker, said it expected its production to fall by about 12 percent in the next business year, starting April, in response to the sharp fall in demand.
Car, truck and bus purchases dropped 32.4 percent last month from a year earlier to 218,212, the steepest decline for February since 1974, the Japan Automobile Dealers Association reported.
The association's director, Takeshi Fushimi, said consumer confidence was worsening and the outlook was highly uncertain.
"We absolutely cannot see the future," he told reporters.
The seventh straight year-on-year decline comes as Asia's biggest economy struggles to cope with its deepest recession in decades.
"The downturn in the Japanese market is accelerating," said Mamoru Kato, auto analyst at the Tokai Tokyo Research Center.
"With the economic crisis, people are worried about their jobs and pay cuts. People are more cautious about spending and consumption is cooling, as reflected in the new car sales figure," he said.
Japan's motor manufacturers have suffered a dramatic reversal in fortunes in recent months as demand falls sharply in recession-hit markets in the United States, Europe and elsewhere.
Toyota has told its suppliers it expects to manufacture an estimated 6.2 million vehicles next year, down from 7.08 million this year, a company spokeswoman said, asking not to be named.
Toyota ended General Motors' 77-year reign as the world's top selling automaker in 2008, but it has not been immune to the global economic downturn and expects its first ever loss in the current financial year to March.
Toyota's domestic vehicle sales fell 32.0 percent last month while Nissan suffered a 35.2 percent drop and Honda saw a 21.1 percent decline, the Automobile Dealers Association said.
But experts said falling oil prices could tempt some buyers of larger cars back into the market.
"A general improvement in the economy next year or the following year should also drive up auto sales," said Kato.
The global economic downturn has taken a severe toll on the finances of Japanese automakers, which rely heavily on exports.
Alongside Toyota's projected loss Nissan also expects to end in the red and Honda has seen a plunge in earnings.
The makers are pinning their hopes on environmentally friendly technologies to stay ahead of their foreign rivals.
Nissan Motor said Monday that it was considering building a plant in Portugal to make lithium-ion batteries for its electric cars that are set to hit the European market in coming years.
Mitsubishi Motors meanwhile said it had reached a basic accord with France's PSA Peugeot Citroen to jointly build electric cars for the European market.
Mitsubishi will be in charge of manufacturing the vehicle, which will be sold under the Peugeot and Mitsubishi brands from late 2010 or early 2011.
Date created : 2009-03-03