Big Car Discounts By Foreign Carmakers In Japan

With car sales stalling amid the global recession, foreign carmakers in Japan have launched discount campaigns in a bid to overcome the double disadvantage they suffer as many of their products are not subject to tax breaks or government purchase subsidies for eco-friendly car buyers.

The foreign carmakers' strategy is to play up the distinctive and luxurious features of their new models, while simultaneously calling consumers' attention to their reduced prices.

On May 8, Mercedes-Benz Japan began offering a discount of up to 450,000 yen(US$4,746) on three models, including one equipped with a low-emission diesel engine. Meanwhile, BMW Japan is offering a discount of up to 250,000 yen(US$2,637) for its Mini cars. The Japanese arms of Fiat, Volvo and Audi, are also offering discounts at their own initiative in a bid to boost flagging sales of imported cars--many of which are not subject to tax breaks and the government's subsidy system for those who buy new eco-friendly vehicles.

As part of its pump-priming policies, the government implemented in April a tax reduction for eco-friendly cars. It also has included a subsidy system in the supplementary budget for fiscal 2009, under which up to 250,000 yen(US$2,637) would be paid to people who trade in their older cars for a new environmentally friendly automobile. The extra budget is under deliberation in the Diet.

But many imported car models are not covered by the tax cuts or the subsidy system as they do not meet Japan's fuel-efficiency and emission standards, prompting their manufacturers to conclude that they needed to come up with their own discount system to compete with their Japanese counterparts.

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