Car Sales in Japan Slump to Two-Year Low

Deliveries of new cars and minivehicles in Japan fell 6% to 345,200 units in April as the country raised its consumption tax to 8% from 5%.

Last month's volume compares with an abnormally high 783,000 sales in March, when consumers scrambled to beat the tax hike.

April's decline could have been even worse, analysts note. They point out that last month's total included many cars purchased in March whose deliveries were delayed by bad weather. The head of Japan's dealer association warns reporters that volumes this month are likely to become "very grave."

The Japan Automobile Manufacturers Assn. estimates annual sales will plunge 16% in the fiscal year that began April 1.

Bloomberg News reports that when Japan hiked its consumption tax in 1997, cars sales fell 15% and trailed year-earlier volumes for 21 consecutive months.