Japan Car Sales Slump, South Koreans Gain Globally

New vehicle sales in Japan slumped by more than a fifth in June as the production disruption from the March earthquake lingered, but the data showed a big improvement from the previous months as more parts became available.

In neighboring South Korea, Hyundai Motor and Kia Motors extended their strong run with double-digit growth, driven by brisk sales of new models.

Japanese vehicle sales, excluding 660cc microcars, fell 23 percent to 225,024 last month, marking the 10th straight month of declines. But officials put on a rare optimistic face on the result, saying sales were well off the post-disaster trough.

"The trend of recovery is very clear," Michiro Saito, general manager at the Japan Automobile Dealers Association, told reporters. "We remain somewhat uncertain of future demand, but we hope that new model launches will help fuel it," he said.

In June, an average 10,228 cars were registered per day, up from 7,482 in May and 5,441 in April, when cars were assembled at a significantly reduced pace with hundreds of parts still missing.

Toyota Motor [TM 82.86 0.44 (+0.53%) ], Nissan Motor [NSANY 21.00 -0.05 (-0.24%) ]and Honda Motor [HMC 38.60 -0.01 (-0.03%) ], Japan's top three automakers, have all said they are close to being able to build as many cars as they had planned before the quake, with only a few critical components still affected.

Including minivehicles, which are tallied separately, new vehicle sales in Japan, the world's third-biggest car market, slid 22 percent to 351,828 in June.

Results varied across the brands, with Nissan showing a 4.2 percent rise from a year ago — the first uptick in nine months — while Toyota and Honda suffered declines of more than 30 percent.

Nissan has restored production faster than its rivals, managing to build more vehicles in May while output at Toyota and Honda more than halved.

Hyundai, Kia on a Roll

Hyundai and Kia extended their industry-beating march after sales accelerated in the past few months as quake-hit Japanese rivals suffered from a dearth of products.

The duo, which ranks fifth in global car sales, are expected to report healthy sales and earnings in the second half, but would need to manage investors' expectations in the face of a weakening global economy, analysts said.

"The slowing global economy may deal a blow to consumer sentiment. But there is pent-up demand for cars in the United States after the market collapsed in the wake of the global financial crisis," said Yoon Phil-joong, an analyst at Samsung Securities.

"Consumers also place value on practicality during difficult economic times. Korean car makers are relatively safe," he said.

Hyundai's global sales rose 12.3 percent to a monthly record in June, helped by strong sales in the United States, China, India and South Korea. Kia's sales surged 22 percent.

Maruti Suzuki Sales Fall

Sales at top car maker Maruti Suzuki India declined 8.8 percent to 80,298 vehicles, marking the first fall since December 2008 and pushing its shares down as much as 2.6 percent.

Production at Maruti, 54.2 percent owned by Japan's Suzuki Motor, was hurt by a strike last month that led to a production loss of about 16,000 cars.

In total, Indian automakers sold 158,817 vehicles in May, up 7 percent in what was the slowest pace of growth in two years.

Analysts expect a further slowdown as rising fuel prices, interest rates and vehicle prices crimp demand. India raised diesel and petrol prices by about 9 percent in the past two months.

"There will certainly be a shift from cars to two wheelers for the middle class who are looking to buy low-end cars, because they can save on costs," said Kishor Ostwal, chairman at brokerage CNI Research.

India's third-largest two-wheeler maker, TVS Motor, reported a 14 percent rise in June sales to 182,456.

Sales at Tata Motors, India's largest maker of trucks and buses, fell 1 percent to 66,358.

Sales of its Tata Nano, touted as the world's cheapest car with its lowest priced variant costing 151,907 rupees ($3,398), plunged 29 percent. (CNBC Asia)