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Japan tax hike takes toll on auto sales

Japanese auto sales dropped 11.4 per cent in April from a year ago, an industry group said Thursday, highlighting the impact of a sales tax rise which sparked a mad dash to stores ahead of the levy hike.

TOKYO: Japanese auto sales dropped 11.4 per cent in April from a year ago, an industry group said Thursday, highlighting the impact of a sales tax rise which sparked a mad dash to stores ahead of the levy hike.

The drop marked the first fall in eight months, with sales of new cars, trucks and buses totalling 188,864 vehicles, the Japan Automobile Dealers Association said, although sales of thrifty mini-vehicles hit a record high.

The Japanese auto market -- the world's third largest behind China and the United States -- had been enjoying double-digit sales increases in recent months as shoppers snapped up big-ticket items before the April 1 tax rise to 8.0 per cent from 5.0 per cent.

The tax rise was Japan's first in 17 years, a move seen as key to taming its huge national debt but one which aggravated fears that a drop in consumer spending would dent the economy.

Japan still saw upbeat demand for mini-vehicles -- light cars with engines of 660 cc or less -- as sales rose 2.9 per cent to a record 156,362 units in April, the Japan Light Motor Vehicle and Motorcycle Association said separately.

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