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Japan’s automakers team to tackle taxes

Taxation on cars in Japan estimated to be 49 times those in the U.S.


November 7, 2011
by The Canadian Press

TOKYO—The presidents of Japan’s major automakers have gathered 4.3 million petition signatures calling for the end of what they’re calling exorbitant taxes on cars that threaten to hollow out manufacturing and wipe out jobs.

The plea from the heads of Toyota Motor Corp., Nissan Motor Co., Honda Motor Co. representatives from auto unions and dealers —a rare show of combined forces—underlines the industry’s crisis from the March tsunami disaster, the surging yen and stagnant sales.

“This goes beyond the problem of a hollowing out of the economy. The industry could be destroyed,” said Toyota President Akio Toyoda. “Once jobs are lost overseas, it is impossible to recover them.”

Officials want to retain manufacturing in Japan to keep technological development going and protect jobs.

But the odds are stacked against them—a complex system of taxation on cars estimated to be at least twice those in the U.K. and Germany and a whopping 49 times the U.S rates stand in the way.

All the while, Japan’s strong yen has been eating away at overseas sales.

Reducing the tax burden could improve domestic sales by 920,000 vehicles in Japan, according to a government estimate.

Japan’s annual sales of new autos have shrunk to about 4.25 million vehicles, falling from a peak 7.8 million vehicles in 1990.