A healthy U.S. auto industry is vital for a sound U.S. economy and by extension for Japanese carmakers, a Tokyo-based auto lobby said, giving a tacit nod to the latest request for federal aid from ailing rivals in Detroit.

General Motors Corp and Chrysler this week sought nearly $22 billion in additional U.S. government loans on top of the $17.4 billion in loans they have so far received to survive as car sales plummet around the world.

The auto industry -- the Big Three -- plays an important role in the U.S. economy, Satoshi Aoki, chairman of the Japan Automobile Manufacturers Association, told a news conference.

The latest (aid request) is quite substantial but we hope it will lead to the health of the U.S. auto industry, he said.

The United States is the single-biggest and traditionally most profitable market for Japan's top three automakers, Toyota Motor Corp <7203.T>, Honda Motor Co <7267.T> and Nissan Motor Co <7201.T>.

Aoki, also chairman of Honda, said the U.S. market appeared headed for a weaker year than the sales of 12.5 million vehicles he had forecast for 2009 at the end of last year.

We are still anticipating an improvement in the latter half of the year driven by economic stimulus steps under the new Obama administration, and we hope total demand will come in just below 12 million units.

Most industry forecasts are lower, with 11.5 million at the higher end. The U.S. market totaled 13.2 million vehicles in 2008, down 18 percent from 2007.

Many governments have announced various forms of aid to the struggling auto industry, which has been hit by a simultaneous slide in demand globally. Among them, France has pledged loans of 3 billion euros ($3.77 billion) each to its two local carmakers while Britain has said it would guarantee up to 2.3 billion pounds ($3.28 billion) of loans to the industry.

Japan has been conspicuously absent from that growing list. Aoki said the auto lobby has made no request for specific aid even as many members brace for their worst annual financial results in years.

The auto industry requires a lot of capital for research and development of advanced safety and environmental technologies, but basically it's up to each company to raise funds in the market or use its own cash reserves, Aoki said.

But right now market conditions are tough and abnormal, and we only hope that the government will take steps to bring the market closer to normal levels, he said.

Responding to such concerns, the Bank of Japan on Thursday extended its commercial paper buying scheme and pledged to boost supply of low-cost funds as it battles a credit crunch that is pushing the world's second-biggest economy deeper into recession.

($1=.7949 Euro; $1=.7007 Pound)

(Editing by Michael Watson)

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