Japan’s car sales fall but at slower pace as supply constraints ease

Cars drive along Chirihama Nagisa Driveway in Hakui
FILE PHOTO: Cars drive along Chirihama Nagisa Driveway, the only place in Japan where cars can be driven by the edge of the surf, in Hakui, Ishikawa Prefecture, Japan December 3, 2017. REUTERS/Issei Kato

January 5, 2022

TOKYO (Reuters) – Japan’s domestic new car sales fell 11.4% in December from a year earlier, industry data showed on Wednesday, a sign that supply bottlenecks continued to delay deliveries and weigh on the country’s fragile consumption.

But the pace of decline slowed from 31.3% in October and 14.3% in November, as automakers gradually emerged from parts shortages and Southeast Asian factory shutdowns that hammered production last year.

Auto sales are among data closely watched by analysts for clues on how quickly Japan’s output and consumption can recover from last year’s pandemic-induced slump.

The recent rise in Omicron coronavirus variant cases adds to uncertainty over the economic outlook, as the Bank of Japan meets for a policy review on Jan. 17-18 and produces fresh quarterly growth projections.

Japan’s factory output jumped at the fastest pace on record in November, as easing global supply chain bottlenecks helped car production leap out of its recent slump, lifting prospects for a strong fourth-quarter economic rebound.

But automakers are still unable to completely shake off the drag from persistent parts and chip shortages including Toyota Motor Corp, which said it would suspend production at five domestic factories in January.

(Reporting by Maki Shiraki and Leika Kihara; Editing by Kim Coghill)