New car sales in Japan rose for the 11th straight month and South Korea's Hyundai Motor reported a double-digit rise in global sales in July, but a slowdown looked certain as government subsidies end and comparisons become difficult from the year before.


Promoters pose at an unveiling ceremony for a new model of Hyundai Motor's flagship mid-sized sedan, Sonata, in Seoul.Choi Bu-Seok/Reuters

Government stimulus measures have buoyed car purchases in many countries after demand crumbled under the weight of the global financial crisis, but the snap-back has been harsh, boding ill for markets such as Japan, where subsidies to replace older cars expire next month.

We have no clue how bad the decline will be beyond October, said Michiro Saito, manager at the Japan Automobile Dealers Association.

Sales of new vehicles in Japan, including 660cc minivehicles, rose 12.9 percent in July to 486,606 vehicles, despite having one fewer selling day than the same month last year, industry data showed on Monday.

Toyota Motor Corp, Honda Motor Co and most other brands posted double-digit rises in sales excluding 660cc microcars, which are compiled separately by the Japan Mini Vehicle Association.

Nissan Motor Co was a notable exception with only a 2.3 percent uptick after it was forced to suspend production in Japan for three days due to a shortage of engine-related components supplied by Hitachi Ltd.

Elsewhere, sales growth in China has already started to slow from the break-neck pace recorded last year, as expected. But the sluggish recovery in the United States has come as an unwelcome surprise, while macroeconomic concerns and austerity measures are clouding the outlook in Europe.


Uncertainty over global car demand in the latter half of the year have kept Nissan, Mazda Motor Corp and others from raising their financial guidance after a strong April-June quarter. Toyota is due to announce its first-quarter results on Wednesday.

Top South Korean automaker Hyundai reported its weakest monthly sales in five months on Monday as foreign sales slowed on easing growth in major markets such as China and the United States.

It sold 293,460 cars in July, up 11.8 percent from a year ago, but down 6.4 percent from the previous month and the weakest figure since February.

Weakening demand from Europe and China is a bit of concern. But it's too early to say that demand will sharply reduce in the second half as current data is also affected by seasonal weakness, said Lee Hyung-sil, an analyst at Solomon Investment and Securities.

Overall auto sales could fall further in August (from the previous month) as many producers will reduce production due to summer holidays and weak seasonal demand, he added.

Italian car sales, due later on Monday, are estimated to have fallen 26 percent in July as government incentives ended, la Repubblica and other newspapers reported.


On Monday, South Korea's largest automaker unveiled its upgraded compact Elantra, its best-selling foreign car, and said it was targeting sales of 83,000 Elantra vehicles domestically this year and 125,000 next year.

Its affiliate Kia Motors posted monthly sales of 179,003 cars, another all-time high and up 41 percent from a year ago, powered by impressive sales of its new K5 sedan, Sorento R and Sportage R SUV models.

Ssangyong Motor Co, which is up for sale and has extended the bid deadline to August 10, reported July sales jumped more than 100 times to 7,369 units, providing reassurance that the cash-strapped automaker was on a firm recovery track under a court-led restructuring plan.

In other Asian markets, top Indian car maker, Maruti Suzuki India, scored a 33 percent surge in domestic sales to 90,114 units -- its highest-ever monthly tally. Rival Mahindra & Mahindra said its July sales rose 24.3 percent.

Volumes will pick up as the festival season in India is coming up. Also, the annual monsoon is expected to be good, so that should also help, said Vaishali Jajoo, autos analyst at Angel Broking in Mumbai.

(Additional reporting by Devidutta Tripathy in NEW DELHI and Seo Jiwon and Miyoung Kim in SEOUL; Editing by Lincoln Feast)