Japan to turn down 52,000 car subsidy requests

Trade the News

Thursday September 09, 2010 10:32:09 AM GMT

TOKYO, Sept 9 (Reuters) - The Japanese government said on Thursday it would turn down about 52,000 applications received a day earlier under its cash-for-clunkers programme after hitting the budgeted amount for the subsidies.

The government had allocated 583.7 billion yen ($6.96 billion) to encourage consumers to scrap cars 13 years old and older in favour of certain fuel-efficient models, setting a Sept. 30 deadline for the scheme, which took effect in April 2009.

The Ministry of Economy, Trade and Industry said on Wednesday it had only about 1 billion yen left in the budget as of Sept. 7, and warned it would not accept any applications received on Sept. 8 in the interest of fairness.

Japanese automakers are bracing for a hard landing after the scrappage subsidies disappear, although another government incentive to stimulate car sales with lower taxes on certain fuel-efficient vehicles is due to last until March 2012.

Sales of new cars, trucks and buses in Japan soared 37.7 percent to 424,986 vehicles last month as consumers rushed to take advantage of the scrappage subsidies.

Japanese automakers, led by Toyota Motor Corp, have in the past managed to offset dwindling domestic demand with exports, but with the U.S. and European economies still on shaky ground that prospect looks bleak. Exporting cars from Japan has also become less easy with the yen at multi-year highs against the dollar and euro despite the government's attempts to talk it down. ($1=83.86 Yen) (Reporting by Chang-Ran Kim; Editing by Michael Watson)

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