Japan Auto Sales Plunge as Young Lose Interest

"I don't believe that having more things enriches you," Makino said in a recent interview at his apartment, sitting among shelves of wooden crates. "If you stay happy in your soul then you can be happy without money."

Companies like Toyota (TM Quote) and Honda (HMC Quote), along with the electronics giants like Sony (SNE Quote) and Panasonic (PC Quote), are the mainstays of the world's second-largest economy, and a hollowing out of manufacturing would be lethal.

Manufacturing makes up a fifth of Japan's economy in gross domestic product. But it makes up 90% of its exports, and any faltering in that sector would send debilitating ripple effects throughout Japan. And that's likely to further depress auto sales in Japan.

Unlike other industrialized nations, Japan lacks other sectors to drive its economy such as financials and services. Consumer spending makes up about 60% of Japan's GDP.

The damage to this nation's economy would be devastating if the auto industry fails to turn itself around because so many jobs will be affected -- not only directly at the plants but related ones such as auto-parts makers, distributors and other jobs, including electronics companies that make batteries and other products for the auto industry.

Already, automakers here have shed thousands of jobs at plants, which had been producing cars for export to the U.S. and other overseas markets with a bigger thirst for autos. Toyota is projecting its first operating loss in 70 years.

Some dealers are taking extraordinary steps to attract domestic customers.