Global Green Incentives Revive Japanese Car Sales

Government incentives in Europe and Japan to buy green vehicles are gradually lifting sales at Japan’s automakers, offering a bit of relief to the battered industry.

Mazda said Wednesday that production at its Japanese plants will return to full capacity next month as demand in Europe recovers amid government stimulus measures.

Demand for hybrid cars is strong: Toyota says orders for its new hybrid Prius in Japan are booming, while Honda’s rival offering, the Insight, was the top-selling vehicle in Japan in April.

Japanese automakers say the recovery in demand appears to be partly stimulated by “scrap incentives” — tax cuts or rebates for consumers to scrap their old cars and buy ecological vehicles.

Orders for Nissan Motor Co.‘s ecological models that qualify for Japanese tax breaks were up roughly 30 percent this month so far compared to the same period a year earlier, Chief Operating Officer Toshiyuki Shiga said Tuesday.

“Contributing to a clean environment has become part of automakers’ strategy,” Shiga told reporters after showing the new van that will become the 15th model to qualify for a tax break under the program.

In a longer-term move toward fuel efficiency, President Barack Obama announced on Tuesday rules that would have the U.S. auto industry produce by 2016 vehicles that average 35.5 miles per gallon overall.

Governments around the world are taking a prominent role in shaping the auto industry, seeking to rejuvenate their economies while also encouraging consumers to buy cars that consume less fuel and emit less pollution.

In Germany, the government pays consumers 2,500 euros ($3,400) for scrapping a car that is at least nine years old to buy a new, environmentally cleaner vehicle, as part of a government stimulus plan.

China has also promised to subsidize purchases of cars, as well as home appliances, to replace older models that aren’t as energy-efficient. The amount of money earmarked for the subsidies is still unclear.

In Japan, buyers of new cars will get a tax reduction ranging from 50 percent to 100 percent, depending on the mileage and emissions of the model. A buyer could end up paying as much as 80,000 yen less in taxes for a new car.

The Japanese government has also proposed a rebate of about 250,000 yen for trading in a car 13 years old or older for an ecological vehicle — although this plan has yet to win parliamentary approval.

“In Japan, authorities are paying people to buy green cars,” said Christopher Richter, auto analyst with Calyon Capital Markets Asia in Tokyo.

Despite the hopeful signs, the outlook for Japan’s automakers is murky. Toyota, Nissan and Mazda have all tumbled into losses for the just-ended fiscal year, and all three project even more red ink in the year through March 2010.

Japan’s No. 1 carmaker is betting heavily on its third-generation Prius, which it rolled out Monday. Already, Toyota has received 80,000 advance orders in its home market for the new model.

It plans to sell 10,000 of the new Prius in Japan a month — going head-to-head against Honda’s hybrid Insight, which is selling well.

Like other Japanese automakers, Mazda had suspended production at its plants on some days in recent months as auto demand plunged. But starting in June, Mazda will have no more production suspensions as demand for its autos increase in Europe, thanks to the government incentives, said Mazda spokesman Ken Haruki.

German sales of the Mazda 2 and MX-5 Miata gained a combined 45 percent to 3,077 in March from 2,127 in March the previous year. Demand is also growing in France and Great Britain, according to Mazda.

Other automakers are ending production stoppages, which had adjusted output to diving demand.

Toyota, which had halted production for 17 days from January to April at its 11 Japanese plants including four car assembly plants, has full production this month and next, spokeswoman Ririko Takeuchi said.

Honda, Japan’s No. 2 automaker, has returned to normal production from last month after halting production for five days each in February and March.

5/20/2009 5:18 AM YURI KAGEYAMA AP Business Writer TOKYO