Japan incentives boost sales of green cars, TVs

By YURI KAGEYAMA

TOKYO

Japanese are snatching up hybrid cars, solar panels and energy-efficient TVs, wooed by government incentives designed to battle a recession while conserving energy.

Tax breaks and rebates on green cars have helped two hybrid vehicles, Toyota's Prius and Honda Motor Co.'s Insight, become the best-selling models in Japan the last two months. Likewise, consumers are buying up ecological electronics products to earn "eco-points" that the government has promised can be later converted into products or other deals that have yet to be announced.

The renewed consumption is giving Japan's struggling corporations and sagging economy a much-needed jolt -- although some economists wonder if the demand created by the incentives will run out of steam.

Car dealership owner Hiromi Inoue can barely contain his glee over the thousands of Prius orders coming into his Toyota showrooms in Tokyo, now making up more than half their sales.

"What we're seeing is extraordinary," he said.

Japan's automakers could use some help: vehicle sales here dropped to their lowest level in three decades last year, and Toyota Motor Corp. sank into its worst annual loss since its 1937 founding.

Under a new government program, hybrids are now tax-free, delivering savings of about 150,000 yen ($1,500) for a Prius buyer. Other fuel-efficient models qualify for lower savings.

Also helping is a "cash-for-clunkers" program similar to the plan initiated by President Barack Obama, which offers vouchers worth up to $4,500 for a gas-guzzler turned in for a new car in the U.S.

In Japan, people who trade in a car 13 years or older get a 250,000 yen ($2,500) rebate for buying an ecological model. Those without a trade-in get 100,000 yen ($1,000).

Koji Endo, auto analyst with Credit Suisse, expects green incentives to lift annual Japanese vehicle sales by 100,000 vehicles or more.

The green boom has also caught on in electronics.

People who buy certain types of energy-saving TVs, refrigerators and air conditioners earn "eco-points" that they hope to exchange for other products later.

"Everyone -- families, old people, young people -- are coming to buy TVs," said Junichi Yajima, sales clerk at Bic Camera retail chain. "Some people don't understand 'eco-points,' but they've heard about it and see it as a good opportunity."

Yajima says each "eco-point" will likely be worth about 1 yen, and the points range from 7,000 points for a flat TV that's 26-inch or smaller to 36,000 points for one that's 46-inch or larger.

Electronics sales shot up 50 percent on year during the mid-May week after eco-points started, according to the trade ministry. Researcher Gfk Marketing Services Japan says sales of flat-panel TVs were up 60 percent from a year earlier.

"We don't know what 'eco-points' are yet, so we're also looking at features and prices," said 40-year-old housewife Kaori Kawabata, shopping for a flat-panel TV with her husband at a bustling Bic Camera.

Government incentives like "eco-points" highlight this export-reliant nation's efforts to lift domestic consumer spending.

Japan's top electronics makers, including Sony Corp. and Panasonic Corp., rake in much of their profits from overseas sales, which have been hammered by the global slump.

Household spending has been lagging for months, as the unemployment rate surged to a six-year high of 5 percent and companies slash summer bonuses.

Another area the government hopes to nurture is solar energy. Japan is home to leading solar panel makers, such as Sharp Corp., Kyocera Corp. and Sanyo Electric Co.

The government wants to lift world market share of Japanese makers to a third by 2020 from a quarter today, with hopes of adding 110,000 jobs and growth worth 10 trillion yen ($100 billion) to the economy.

Since January, the government has been offering 70,000 yen ($700) per kilowatt, which delivers about a 10 percent savings for panel installment costs. Some 33,700 homes have applied for the solar subsidies.

Separately, Parliament is hammering out a law to give more money to households for buying back electricity from solar-powered homes.

Hiroshi Watanabe, economist at Daiwa Institute of Research, says such incentives help keep some spending going in a troubled economy, but they may not have a lasting impact. As long as incomes don't improve, they aren't real fixes.

"Whenever there is a major rise in demand like this, there is sure to be a backlash in plunging demand later on because demand was just moved up in time," he said.

Watanabe also says the frantic bargain-hunting merely shows people are pinching pennies because they're worried about the economy.

Sadami Nakamura, 64, who works for an insurer, was standing in a long line at city hall to get rebate coupons, part of a new regional government program to stimulate spending, which will give her a 10 percent discount at some stores.

"I don't agree with this kind of program," she said, dismissing it as "a handout." "But since they're offering it, I'm going to take it."