Japan considers subsidizing hybrids

The Japanese government is today reported to be considering offering subsidies of up to 300,000 yen (USD $3,000) on hybrid cars and other environmentally friendly vehicles to improve the country’s air quality and economy.

Government officials could introduce the subsidies before summer and keep them until the end of 2009, according to a story in the Saturday edition of financial daily Nikkei. The subsidies are part of a larger national stimulus plan.

The envisioned move would bolster existing government support for environmentally friendly transportation. Officials already approved a measure to reduce or eliminate taxes for environmentally friendly cars, which went into effect April 1.

The new subsidies are to effect hybrids and electric vehicles as well as gasoline and diesel-powered cars meeting more stringent emission standards.

A buyer of a mini-car meeting the program's standards would get 100,000 yen and a buyer of a larger qualifying vehicle would receive 200,000 yen. A buyer moving to a new green car from a vehicle at least 13 years old would get an additional 100,000 yen.

Government officials hope the subsidy program will encourage motorists to trade in their old cars and buy new ones.

Automakers are banking on consumer enthusiasm. Toyota announced late last month it will introduce a Yaris hybrid to compete with the Honda Insight in Japan and the U.S. (see Toyota plans to take on Honda).

With the fresh government incentives, the price tag for a new hybrid could drop as much as 25 percent to $15,000 for some Japanese motorists.

Increased consumer spending on hybrids would brighten not only the dim economic forecast, but potentially the lackluster environmental progress in Japan.

Global warming emissions rose 2.3 percent in the country during fiscal 2007, due largely to Nippon Steel and JFE Holdings Inc, which increased carbon dioxide emissions 6.25 percent and 3.71 percent respectively. Numbers for fiscal 2008, which ended April 1, 2009, are not yet available.

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