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Auto Industry Stalls In Japan


Let's look now at a vital part of the Japanese economy: the auto industry. While vehicle sales in the United States last month were at the highest level since August of 2007, Japanese auto sales decreased by nearly 16 percent. That is just the latest in a six-month slide for auto sales in Japan. In today's business bottom line, NPR's Sonari Glinton looks at Japan's faltering domestic auto sector.

SONARI GLINTON, BYLINE: In the U.S., consumers are back to buying cars, whether they're Japanese, American or European. Alec Gutierrez is an economist with Kelley Blue Book, and he says that's not the case in Japan.

ALEC GUTIERREZ: In Japan, when the recession hit in 2008, we didn't see as big a correction on the downside, and thus we didn't see as big a need for a recovery. And only now are we seeing some residual weakness in the Japanese market as Japanese manufacturers are struggling to find enough consumers to purchase those vehicles that are for sale in their home country.

GLINTON: Why are Japanese automakers looking for and not finding consumers in Japan?

GARY HUFBAUER: The reason for that is fundamental and straightforward.

GLINTON: Gary Hufbauer is a senior fellow with the Peterson Institute for International Economics, a think-tank in Washington, D.C.

HUFBAUER: The Japanese population is aging probably more rapidly than any other advanced country. And, in fact, the overall population in Japan is probably declining. This is not a picture of rapid demand growth for autos.

GLINTON: Combine that with an increasing migration to cities and the end of a government subsidy for green cars, and demand shrinks further. Hufbauer says while demand remains tepid at best in Japan, the wages of Japanese automakers are the highest in the region.

HUFBAUER: Consequently, the manufacturers of autos, the big names, basically, they're migrating from Japan. They see their future - well, I'll be very concrete about this - Toyota sees its future in North America. That's going to be the heartland of Toyota.

GLINTON: The Japanese automakers are increasingly building cars where they sell them, like the U.S., and that's affecting exports from Japan. Now, part of the strategy is that the carmakers don't want to be vulnerable to what has historically been a strong yen. The yen is weakening, making exports from Japan easier, but Mike Wall with IHS Automotive says it didn't happen quick enough for car manufacturers in Japan.

MIKE WALL: I think the automakers themselves are moving beyond the point of even being vulnerable on currency exchange. They're looking to basically remove that risk altogether, as much as possible, as much as you can. So that's where you see more and more of this, you know, manufacturing being moved to other markets.

GLINTON: The markets where most of the growth is: Brazil, Russia, India and China - especially China, the most important and largest.

JEREMY ANWYL: There's historical friction between sort of China and Japan. So, Japanese cars aren't selling very well in China right now.

GLINTON: Jeremy Anwyl is with the car website Edmunds.com, and he says the Japanese history of occupation of China and other tensions between the world's second and third-largest economies has a direct effect on the Japanese economy and the car industry.

ANWYL: So there's just a historical animosity there, and sometimes that flares up, and you can see that actually being felt in terms of Japanese cars being shunned by Chinese consumers.

GLINTON: Anwyl and all the other people I talked to for this story, each of them pointed out one thing...

ANWYL: The thing that's important to note is that when we talk about the American car companies, the European car companies, the Japanese car companies and what have you, these are really out-of-date terms.

GLINTON: That's because even though Toyotas may not be selling like hotcakes in Japan, they are in the U.S. And at some point, every automaker selling cars around the globe may have to shed its national identity. Sonari Glinton, NPR News. Transcript provided by NPR, Copyright NPR.