TOKYO: Japan will increase tax for mini-vehicles in coming April by 50% to JPY10,800 (USD90) a year, which account for approximately 40% of new car sales in 2014 in Japan.
The higher tax, which will only apply to new mini-vehicles purchased from April 1, will have a very limited impact on the performance of auto loans in new auto loan asset backed securities (ABS) transactions, because: (1) the tax amount is relatively low; (2) auto loan ABS obligors are typically of good quality; and (3) other government tax relief measures will help offset the impact of the mini-vehicle tax hike. The tax increase will have no impact on the performance of existing auto loan ABS, because the higher tax rate will not apply to vehicles.
