Japan Govt-Induced Shopping Binge Yet to Trigger Broad Recovery

Tokyo, June 11 (Jiji Press)--A government-induced shopping binge in
Japan on environmentally friendly vehicles and electronics has yet to
trigger a broad-based recovery of consumption.

Economic and Fiscal Policy Minister Kaoru Yosano says the Japanese
economy bottomed out in January-March, showing his confidence in an imminent
economic recovery backed by a series of government stimulus measures.
But retailers and other businesspeople are not so confident. Amid
job losses and bonus cuts, they are concerned the effects of the one-off
boost will fade before a full-blown recovery starts.
Sales of gas-electric hybrid cars, especially Toyota Motor Corp.'s
<7203> Prius and Honda Motor Co.'s <7267> Insight, are soaring thanks to
subsidies and tax cuts designed to promote purchases of fuel-efficient cars.
But automakers are not all happy. They are concerned that growth is
localized.
"It is not good if the Prius is the only model that is selling
well," Toyota President Katsuaki Watanabe says. "The pie needs to expand."
Production of the Prius is months behind demand. Even if an order
is placed now, the car will not be delivered until the end of the year.
The Prius topped the country's new vehicle market with more than
10,000 units sold in May, when a new version was introduced.
Despite the Prius' popularity, Toyota's overall vehicle sales were
down 23 pct year on year.
"The auto market is being distorted" with disproportionate sales
growth only for hybrids, says an official of the Japan Automobile Dealers
Association.
Another sector feeling the impact of government stimulus measures
are electronics retailers. The government launched a program last month that
gives consumers shopping points if they buy certain energy-efficient home
appliances.
The so-called eco-point program was like "a welcome rain in the dry
weather" to the struggling industry, executives say.
Yamada Denki Co. <9831>, a major electronics retailer, saw shoppers
literally rush into its stores. Sales of television sets and refrigerators
shot up 50 pct from a year before in the first three days of the program.
Air conditioner sales were up 35 pct.
Kojima Co. <7513> President Akitoshi Kojima says the program is
forecast to push up the company's overall annual sales by 5 pct.
However, momentum seems to have slowed considerably, now that four
weeks have passed since the start of the program.
"Customer traffic has returned to an average-year level," says the
chief of a large electronics retail store in Tokyo.
"We are now uneasy about the bonus season," the official says,
showing concern that the eco-point program has only prompted front-loading
of consumer expenditure that would otherwise be made in the coming bonus
season.
The official also says sales of products not covered by the
government program remained lackluster.
Fast Retailing Co. <9983> President Tadashi Yanai stressed the
importance of stimulating potential demand to ensure sales growth.
The operator of the Uniqlo casual clothing chain recorded
double-digit sales growth in May, while major department stores incurred
double-digit falls.
In the real estate industry, too, growth is localized and a
nationwide recovery is not on the horizon.
Sales of condominiums are recovering in the Tokyo metropolitan
region thanks to deeper tax cuts for home buyers. The number of unsold
condos at the end of April was 30 pct below the most recent peak at the end
of December.
But inventories remain high in the Kinki region, another major
urban area surrounding Osaka, western Japan.
As many corporate and government employees are expected to take
bonus cuts, their appetite to spend is likely to decrease.
A survey by MM Research Institute shows that those planning to buy
goods or services with their bonuses accounted for 30.4 pct of the total
respondents, down sharply from 44.0 pct a year before.
"Domestic demand is weighed down by the deteriorating employment
situation," said Hideo Kumano, economist at the Dai-ichi Life Research
Institute. "We cannot expect much from personal consumption."