August - Carmakers Production Growth

OKYO—Japan's top three car makers revved up domestic production in August as consumers rushed out to dealerships to pick up new cars just before government purchasing incentives ended.

Reporting output and sales figures for last month, Toyota Motor Corp., the world's biggest car maker by sales volume, said Tuesday it boosted its production in Japan 13.3% on year. Meanwhile, Nissan Motor Co., Japan's second-largest player, said it lifted its domestic output 24.6% on year in the same month while third-largest Honda Motor Co. said production grew 24.8%.

Such robust growth is likely to stall now that a 17-month period of government subsidies to spur auto sales ended slightly ahead of schedule earlier this month as the budget for the program ran out.

The termination of the government grants is likely to make matters worse for Japanese car makers who are already contending with the risk of slowing domestic production. On top of that, persistent strength in the yen is making it difficult for auto makers to export vehicles overseas as their product has become less price-competitive.

Honda executive vice president Koichi Kondo said last month he expects Japan's industry-wide auto sales to fall as much as 30% in the quarter through December from the same term last year because of the termination of the subsidies.

Nissan chief executive Carlos Ghosn, meanwhile, has said his company's domestic production might drop as much as 20% in October and November compared with September's production volume, weighed down by the ended grants and the strong yen.

But all is not lost for Japan's hard-hit auto industry. The government continues to offer other types of aid to spark domestic auto sales with tax breaks for fuel-efficient cars that are effective until April 2012.

Toyota built 225,634 vehicles in August in Japan, marking the 10th straight month of increase in domestic output as its sales in its home market grew 43% on year to 132,556 vehicles while exports rose 3.9% to 115,216.

During the same period, Nissan produced 91,519 vehicles at home, as its domestic sales increased 34.6% to 55,083 vehicles and exports rose 11.9% to 43,145 vehicles.

Honda's August domestic output totaled 68,065 vehicles as the company sold 65,009 vehicles in Japan, up 59.6%. It exported 27,573 vehicles, up 55.9% on year.

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