Though the tax cut (genzei) for automobile acquisition and weight will continue to be in effect for so-called “eco cars” until at least the spring of 2012, on Sept. 30 the eco car rebate (hojokin) officially ends after having been extended once. The government had allocated more than ¥580 billion for the rebate program, ostensibly to promote the sale of fuel-efficient vehicles, though everybody understands it had more to do with helping car manufacturers and stimulating the economy.
And it worked. More than 4.5 million vehicles were sold under the rebate program. Sales were particularly good during the last month as the program wound down. Applications for rebates from new car buyers on Sept. 6 accounted for ¥11.6 billion in subsidies, the highest one-day amount since the program started more than a year ago. The reason is that people knew the program was about to end and wanted to get in on the deal before it did. The rebate amounts for applications on Sept. 7 could have been even higher except that there was only ¥10.2 billion left in the government rebate fund.
What this means is that some new car buyers, expecting to get in on the rebate, missed it. During the summer the government told car makers and dealerships to notify potential buyers that once the rebate money ran out the program would end, regardless of the original Sept. 30 cutoff date. Also, since the procedure for receiving the rebates requires paperwork, buyers had to take this lead time into consideration.
Consequently, car makers are now offering their own discounts to people who tried to get in on the rebate but failed. Fuji Juko, which makes Subaru cars, is offering up to ¥100,000 off any of its designated eco cars if the sales contract is signed between Sept. 6 and Sept. 23. Nissan is offering the same discount amount to purchasers of eight models as long as the sale is finalized within the month of September. Toyota hasn’t offered any discount but says it may offer rebates of its own to dealerships in October, depending on sales, which are expected to drop steeply now that the rebate program has finished. Studies of similar programs carried out in Germany and Korea found that sales dropped by 20 percent once government subsidies dried up.
What one needs to understand is that Japanese taxpayers were basically subsidizing Japanese auto makers’ recovery from the recession. But they were (and still are, with the tax cut) subsidizing foreign auto makers, too, and Audi, for one, isn’t ready to let go. Audi dealerships are offering a “bold bargain” for several of its fuel efficient models. If a buyer signs a contract before the end of Sept. and misses out on the government rebate, Audi will knock ¥100,000 off the price. This is on top of an even larger discount for the current “Eco Support” campaign, which ends Sept. 30, offering ¥200,000 off the price of four of its models. It sounds like a lot, but Audi can afford it thanks to the high yen.