And while we are trying to reduce the number of vehicles on the road......
From the Autos Insider Weblog
(Detroit News)
Christine Tierney
It’s official — China is No. 2, as Japan’s auto market weakens
China’s vehicle market passed Japan’s last year after sales in China surged by more than a third to 7.2 million vehicles. China’s widely predicted rise to No. 2 is good news for U.S. automakers, particularly General Motors Corp., which is well established there. In addition, a buoyant domestic market is likely to absorb the attention of China’s carmakers, although there’s no doubt that they eventually want to become major vehicle exporters. On the other hand, the weakness in Japan’s auto market should concern Detroit. In 2006, Japan’s vehicle market shrank to 5.7 million vehicles — levels last seen in the 1980s, according to investment firm J.P. Morgan. The only real growth segment is mini-vehicles fitted with engines no larger than 660 cc. They weigh half as much as ordinary cars and because the engines are below the size requiring auto registration, owners pay smaller fees. Excluding the mini-vehicle segment, Japan’s market totalled 3.7 million units in 2006 after an 18th consecutive monthly decline in December. Part of the trouble is Japan’s demographics — Japan has the world’s second-largest economy but its population is graying faster than America’s or Europe’s. With an anaemic domestic auto market, there’s not much chance that Japan’s automakers will ease up on the U.S. market. “The climate for earnings on domestic sales is very bleak, and we think that these generate less than 10 percent of consolidated sector operating profit,” J.P. Morgan said in a research report. “We believe earnings will remain structurally dependent on overseas sales growth in 2007 as well.”
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