Car Sales in Japan Slip 1%

New-car and minivehicle sales in Japan shrank only 1% to 363,400 units in May, suggesting consumers are shrugging off the impact of the country's increased sales tax.

May sales results were bolstered by a 5% increase in demand for minicars, a segment whose volumes have surpassed year-earlier levels for the past 11 months. Sales of regular passenger cars fell 7%.

When Japan's consumption tax rose three percentage points to 8% in April, car sales promptly plunged 6% to a two-year low. The Japan Automobile Dealers Assn. predicted "very grave" results for May and a 16% decline for the fiscal year that began April 1.

JAMA's forecast was based on the impact of the country's last general tax hike a decade ago. That increase plunged the country's auto industry into 21-month slump. Analysts say stronger optimism among consumers about future income appears to be easing the effect of the new tax adjustment.