Japan's battered auto industry saw fresh signs of a budding recovery this week with domestic vehicle sales showing the first year-on-year increase in 13 months, helped by government incentives.
The Japan Automobile Dealers Association said 198,265 new cars, trucks and buses were sold in the world's number two economy last month, an increase of 2.3 per cent on the year.
Japanese automakers are enjoying relatively brisk sales of fuel-efficient cars, helped by government incentives that are aimed at stimulating the weak economy, hit by its worst recession in decades.
Toyota Motor's sales, excluding the Lexus luxury brand, rose nine per cent, to 90,802 vehicles in August, with demand for its passenger cars up 33.9 per cent. Toyota's Prius hybrid has been the top seller in Japan recently.
Honda's domestic sales increased by 13.4 per cent to 31,115 vehicles but Nissan saw a 1.4 per cent decline to 31,015 vehicles.
Under the government of outgoing Prime Minister Taro Aso, car buyers have been able to receive several thousand dollars in subsidies and tax breaks for trading their existing cars for hybrids and electric vehicles.
But it is unclear whether the scheme will continue under the Democratic Party of Japan - which is preparing to take the reins of power from the long-ruling conservatives after a weekend election landslide.
"Sales have risen mainly to government incentives stimulating sales of green cars," said a JADA official.
"But incentives aren't going to last forever. It's uncertain whether the DPJ will continue them. If they don't, sales may start falling again," the official said, asking not to be named.
The auto market here has suffered years of sluggishness as many Japanese, particularly young people in large cities, opt for public transport to avoid the high cost and taxes of maintaining cars.
Weak consumer spending during the recession has also weighed on auto sales, while exports have slumped to major overseas markets, prompting Japanese makers to idle plants and slash thousands of jobs.
In July Honda and Toyota upgraded their outlooks for the current business year to March, saying they could see the flickers of a recovery, although the market remains much weaker than before the economic downturn began.
Japan's new auto sales logged a sixth straight annual fall in the last financial year to March, hitting a 38-year low of 2.89 million vehicles. The data do not include sales of mini-vehicles with engines of up to 660cc.