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Japan auto sales plunge as young lose interest

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  • 12/30 Associated Press
    Published Tuesday, December 30, 2008, by the Associated Press Japan auto sales plunge as young lose interest Auto sales plunge in Japan as young adults no
    Message 1 of 1 , Feb 3, 2009
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      Published Tuesday, December 30, 2008, by the Associated Press

      Japan auto sales plunge as young lose interest

      Auto sales plunge in Japan as young adults no longer dream of their
      own wheels

      By Yuri Kageyama
      AP Business Writer

      TOKYO -- To get around the city, Yutaka Makino hops on his skateboard
      or rides commuter trains. Does he dream of the day when he has his
      own car? Not a chance.

      Like many Japanese of his generation, the 28-year-old musician and
      part-time maintenance worker says owning a car is more trouble than
      it's worth, especially in a congested city where monthly parking runs
      as much as 30,000 yen ($330), and gas costs $3.50 a gallon (about 100
      yen a liter).

      That kind of thinking -- which automakers here have dubbed "kuruma
      banare," or "demotorization" -- is a U-turn from earlier generations
      of Japanese who viewed car ownership as a status symbol. The trend is
      worrying Japan's auto executives, who fear the nation's love affair
      with the auto may be coming to an end.

      "Young people's interest is shifting from cars to communication tools
      like personal computers, mobile phones and services," said Yoichiro
      Ichimaru, who oversees domestic sales at Toyota.

      The Japan Automobile Manufacturers Association predicts auto sales
      in Japan will fall to 4.86 million in 2009 -- the first time below
      5 million in more than three decades. This year, sales are projected
      at 5.11 million, the worst since 1980.

      Vehicle sales peaked at 7.78 million vehicles in 1990 during the
      nation's heyday "bubble" economy. After that burst, Japan was mired
      in a decade-long slowdown, which squelched consumer spending and sent
      car sales on a decline. A surge in gas prices, which has subsided in
      recent weeks, also eroded sales.

      "The changes in individuals' values on cars came cumulatively over
      time," said Nissan Chief Operating Officer Toshiyuki Shiga. "The
      change in young people's attitude toward cars didn't happen overnight.
      So we have to keep convincing them cars are great."

      In an effort to do just that, Nissan Motor Co. has dealerships
      featuring colorful accessories for cars meant to appeal to Japanese
      women's alleged penchant for "cute" things, and signed major league
      star Ichiro for splashy TV ads for a new sporty model, among other
      efforts.

      Toyota, the nation's biggest car maker, has hosted test-drive events,
      taken part in fashion shows and even developed its own suburban
      shopping mall that houses a dealership to reach out to buyers.

      About half the autos produced in Japan are sold in Japan, while the
      other half are exported. But the U.S. market -- where more profitable
      models like light trucks tend to be popular -- is more lucrative.

      Still, this nation's disenchantment with cars is cause for concern.
      Americans, after all, are expected to start buying cars again --
      eventually -- partly because of the inadequacy of mass transit there.

      It's a different story in Japan's cities where streets are clogged but
      trains are efficient. The domestic market also is shrinking due to a
      drop in population.

      Makino, the young man who plays what he calls "organic folk music," is
      typical of the new breed who scoffs at the sportscar-idolizing culture
      of the older generation.

      He and his friends see cars as nothing more than a tool, much like a
      vacuum cleaner, not a reflection of their identity, tastes or income
      level. Makino's father own a car, but he has never owned one. And he
      doesn't know a Honda Fit from a Toyota Vitz.

      "I don't believe that having more things enriches you," Makino said in
      a recent interview at his apartment, sitting among shelves of wooden
      crates. "If you stay happy in your soul then you can be happy without
      money."

      Companies like Toyota and Honda Motor Co., along with the electronics
      giants like Sony Corp. and Panasonic Corp., are the mainstays of the
      world's second-largest economy, and a hollowing out of manufacturing
      would be lethal.

      Manufacturing makes up a fifth of Japan's economy in gross domestic
      product. But it makes up 90 percent of its exports, and any faltering
      in that sector would send debilitating ripple effects throughout
      Japan. And that's likely to further depress auto sales in Japan.

      Unlike other industrialized nations, Japan lacks other sectors to
      drive its economy such as financials and services. Consumer spending
      makes up about 60 percent of Japan's GDP.

      The damage to this nation's economy would be devastating if the auto
      industry fails to turn itself around because so many jobs will be
      affected -- not only directly at the plants but related ones such as
      auto-parts makers, distributors and other jobs, including electronics
      companies that make batteries and other products for the auto
      industry.

      Already, automakers here have shed thousands of jobs at plants, which
      had been producing cars for export to the U.S. and other overseas
      markets with a bigger thirst for autos. Toyota is projecting its first
      operating loss in 70 years.

      Some dealers are taking extraordinary steps to attract domestic
      customers.

      Motoharu Ishii has turned his Honda dealership into a special shop
      for dog-owners. Bigger dogs can't travel in Japanese trains, and so
      pet owners may be among the last holdouts in car ownership.

      He helps them fit their vehicles with cages, offers discount coupons
      at dog runs, and has a fuzzy mat ready for visiting pets -- in the
      same way some dealers prepare play areas for children.

      "We want out customers to stay even a bit longer in our showroom,"
      he said, adding that although sales haven't shot up he has managed
      to prevent drastic drops. "The last thing you want is a deserted
      showroom. If it looks busy, it makes it easier for people to drop by."
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