Toyota, Nissan Lead Biggest Drop in Japan Car Sales in 34 Years

Dec. 1 (Bloomberg) -- Toyota Motor Corp. and Nissan Motor Co. led the biggest drop Japan's auto sales in 34 years as the country's recession cut wages.

Sales of cars, trucks and buses, excluding minicars, fell 27 percent to 215,783 vehicles in November, the Tokyo-based Japan Automobile Dealers Association said in a statement today. Toyota Motor Corp., Japan's largest automaker, sold 106,342 vehicles excluding the Lexus brand, down 28 percent. Sales at Nissan Motor Co., the country's third-biggest, fell 30 percent to 30,134.

Japan's automakers have slashed their earnings forecasts for this fiscal year as declining wages and tight credit curb consumer spending. Wages in the world's second-largest economy dropped for the first time this year in October as companies cut overtime payments by the most in more than six years.

``If income and wealth don't rise, consumption won't either,'' said Mitsuo Shimizu, a Tokyo-based analyst at Cosmo Securities Co. ``Large purchases like cars are particularly vulnerable.''

Prime Minister Taro Aso announced a 5 trillion yen ($52.5 billion) stimulus package in October to boost consumer spending and the Bank of Japan cut the benchmark rate to 0.3 percent to encourage lending.

``The financial crisis is exacerbating already low consumer sentiment,'' JADA said in a statement, adding that car sales for the year may be the lowest since 1974.

Toyota shares lost 1.8 percent to 2,945 yen at the close of trading in Tokyo. Nissan slumped 2.8 percent and Honda Motor Co. declined 2.9 percent.

Firing Workers

Honda's sales dropped 22 percent to 29,448 vehicles last month. Mazda Motor Corp.'s fell 33 percent to 9,699 vehicles.

Japanese companies plan to fire about 30,000 temporary and part-time workers before the end of the business year in March, the Labor Ministry said last week. Toyota will cut its domestic temporary workforce by 3,000 jobs, or 50 percent, by the end of March.

Monthly wages, including overtime and bonuses, fell 0.1 percent to 274,751 yen ($2,876) from a year earlier, the Labor Ministry said in Tokyo today.

Credit is also tightening. Three-month commercial-paper rates for Japanese companies with the highest credit rankings were at 1.2 percent, compared with a 0.49 percent yield on similar-duration government bills, according to Tokyo Tanshi Co.

The drop in domestic demand echoes a sales slump in the U.S., the most profitable market for Japan's carmakers. In October, Toyota's sales in the world's largest car market dropped 23 percent. Nissan's plunged 33 percent and Honda has a 25 percent drop.

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