| TOKYO, April 9
TOKYO, April 9 Japan is set to pass legislation
to encourage consumers to buy new cars as part of a $154 billion
economic stimulus package, including $2,500 in cash incentives
for those replacing cars more than 13 years old.
Hit by a relentless slide in domestic sales, Japanese
automakers have been seeking some form of government-backed
boost for a market they forecast will shrink to a 32-year low of
less than 4.3 million vehicles in the year to March 2010.
The plan, released by the ruling Liberal Democratic Party on
Thursday, calls for a "cash-for-clunkers" programme that would
reward drivers with 250,000 yen ($2,500) for scrapping vehicles
older than 13 years in favour of those meeting fuel efficiency
standards set for the fiscal year starting in April 2010.
It would also offer 100,000 yen on the purchase of each new
car that meets stricter mileage as well as emissions standards,
including hybrids and compact cars such as Honda Motor Co's
(7267.T) best-selling Fit model.
Incentives for both categories will be halved for 660cc
microcars, which already get preferential tax treatment.
The proposed plan is unlikely to be changed much ahead of a
formal government announcement on Friday. [ID:nT325185]
Japan joins a growing number of nations offering such
so-called scrappage incentives, which have helped reverse a
sales slide in Germany in the past few months. [ID:nL2629997]
Details such as the duration or total value of the incentive
programmes are due to be decided later, but Dai-ichi Life
Research Institute estimated the scrappage incentives alone
could translate into sales of 450,000 to 1.51 million vehicles.
Japan, the world's third-largest car market, also lowered
taxes on April 1 on clean-emission cars in a move that the auto
industry lobby estimated would add 310,000 vehicles in sales in
the 2009/10 business year. [ID:nT178078]
That means consumers replacing an old car to buy a new
Toyota Prius hybrid car could save a total of about $4,000.
Analysts said they expected the latest measures to stimulate
demand in the near term since the recession had prompted many
Japanese to hold off replacing their cars.
"This should work positively for domestic car sales," Shinko
Securities' auto analyst Tairiku Sakaguchi said.
He added, however, that there remained a risk that sales
would fall even deeper if the economy does not improve by the
time the incentive programme ends.
(Editing by Hugh Lawson)