Toyota, Honda & Others Boost Output To Meet Cash-For-Clunkers Demand

March 29, 2012
2013 Subaru BRZ

2013 Subaru BRZ

Many eager auto shoppers in Japan have been stymied by inventory shortages, but according to the Wall Street Journal, the wait for new wheels may be coming to an end. The Journal reports that most Japanese companies are ramping up output, with significantly more cars rolling off the lines over the next few months.

Honda reported the biggest jump in production, clocking in at 65% above last year. Toyota increased by 22%, Nissan by 20%, and even Suzuki boosted output by 3.4%. Among major brands, only Mazda scaled down, with production falling 15% behind last year, due mostly to slumping exports.

Figures for Subaru weren't given, but based on the outrageous demand for the brand-new 2013 BRZ, we'd be surprised if the Subaru team hadn't kicked things up a notch or twelve.

Why the surge? There are at least three reasons.

For starters, production last year was atypically low due to the Tohoku earthquake and tsunami that hit Japan on March 11. The floods that inundated Thailand during the latter half of 2011 didn't help matters, since Thailand is home to key facilities for both automakers and suppliers. So in a way, Japan's perceived increase in production is more like a return to normalcy.

On a related note, as Japan recovers from last year's natural disasters, Japanese consumers are returning to showrooms. Shoppers are willing to spend again, and assembly lines are simply working to meet the demand.

But by far, the biggest reason for the increase in new-car output is the massive incentive package that the Japan has introduced to help spur sales across the country. The government has earmarked ¥300 billion ($3.63 billion) for the program, which is aimed at getting Japanese shoppers to purchase fuel-efficient rides.

Similar in concept to the Cash-for-Clunkers programs seen in the U.S. and elsewhere, Japan's incentive program offers subsidies of ¥70,000 or ¥100,000 ($849 or $1213) to consumers who purchase fuel-efficient vehicles between December 20, 2011 and January 31, 2013. The program has been hugely popular, causing a jump in sales of 32% in February alone.

The only problem? Like Cash-for-Clunkers, Japan's incentive program will end when the funds run out, and some analysts aren't even sure that the money will last through the summer.

Of course, by then, Japan will be further down the road toward recovery, meaning that consumers may be in a better position to purchase vehicles -- even without incentives. And as we saw here in the States, incentive programs don't necessarily mean a loss of future sales.

Does this mean that supplies of Japanese models at U.S. dealerships will also increase? Probably -- though for different reasons.

Because of Japan's incentive program, many of the models seeing huge production growth are fuel-efficient rides. There's increased demand for those in the U.S. too, due to soaring gas prices that currently rest at $3.89 and are poised to go even higher. We'd expect to see a greater supply of Japanese-made vehicles like the Toyota Prius in showrooms before long.

With a little luck, maybe Subaru will even ratchet up the number of BRZs it's bringing over. Fingers crossed.

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