Japan to extend tax cut for eco-cars as production delayed

The government and ruling parties are planning to extend Japan's tax reduction for owners of eco-friendly vehicles beyond the current end date of April, as semiconductor shortages have delayed the delivery of purchased cars, sources close to the matter said Friday.

Automakers and the industry ministry have requested a one-year extension but details have yet to be worked out, the sources said.

Normally, cars subject to the tax cut are gradually narrowed down with applicable standards tightened in order to encourage drivers to switch to more fuel-efficient cars and manufacturers to develop new technologies.

Around 70 percent of new cars sold, including hybrid, electric and fuel-cell vehicles, currently qualify for the tax cut.

Carmakers have recently faced difficulties in procuring components amid a chip shortage and disruptions in the supply chain caused by the coronavirus pandemic.

The delayed production has fueled concern that dealers will have to make up for tax breaks on cars if they are not delivered before the tax reduction is scaled back.

© Kyodo News