The Japan Automobile Manufacturers Association, expecting the worst annual domestic vehicle sales in three decades, said Thursday demand is lagging behind its forecast amid rising unemployment and falling wages.
Sales are "not yet strong," JAMA Chairman Satoshi Aoki said. The group had predicted a sales drop of 8.5 percent to 4.3 million in the year ending in March.
Consumer spending is down as wages fell for the 11th straight month and the jobless rate reached a five-year high in April. Prime Minister Taro Aso plans to give subsidies for purchases of new fuel-efficient cars to spur sales as part of a ¥15.4 trillion stimulus program.
The incentives may help revive demand, said Aoki, also chairman of Honda Motor Co.
Toyota Motor Corp. led a 19 percent drop in domestic vehicle sales last month. The pace of decline in vehicle sales slowed in May from 32 percent in March and 29 percent in April as government tax incentives helped boost sales of the Toyota Prius and Honda Insight gasoline-electric hybrid cars.
Electric, hybrid, natural gas, plug-in hybrid and some diesel vehicles now qualify for an exemption from some purchase taxes.