Lets Take Another Look At That Drop In Japanese Auto Sales

Implications: The Japanese Auto Dealers Association blames having one fewer selling day in May and a recent tax change for the drop in May sales. Those two factors are not insignificant.

Analysis: Ask any auto dealer what difference one day can make in a single months sales totals and you will get a unanimous opinion that it is significant.

In terms of auto sales in Japan in May, that one day helped to account for the drop 6.1% in May from the previous year. But perhaps a tax rate change was equally responsible.

In May the rate of taxes on vehicles returned to the original 5% from the provisional rate of 3%, as the ruling coalition voted to endorse the increase in the House of Representatives' session on April 30 amid a parallel parliamentary row over a gasoline tax.

During the month of April, when the ruling coalition seemed poised to bring back the auto purchase tax rate to the higher rate effective May 1, consumers moved forrard the timing of their auto purchases.

Four of the five major Japanese automakers - Toyota - Mitsubishi - Nissan - and Mazda- saw year-to-year sales drop during May, while Honda saw sales rise.

Interestingly, Honda is also expected to be the only major automaker to show a sales increase in the U.S. for May.