Chinese boycott Japanese autos amid territorial dispute

Tuesday , October 09, 2012 - 9:20 AM

Japan China

In this Sept. 16, 2012 photo, a man looks at a burnt car after anti-Japan demonstrators attacked a...

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BEIJING - Toyota and Nissan on Tuesday reported their biggest drops in China sales since at least least 2008 after consumers shunned Japanese cars amid a territorial dispute between Asia’s two largest economies.

Deliveries at Toyota tumbled 49 percent to 44,100 vehicles in September, dropped 35 percent to 76,066 units at Nissan and fell 41 percent to 33,931 at Honda, the companies said. Neither Toyota nor Nissan had reported bigger declines before, based on available figures stretching back to 2008, while Honda’s sales were the lowest since May 2011, according to monthly statements compiled by Bloomberg.

The results help illustrate the rising financial toll on Japanese automakers, who are facing their third crisis since 2011 after the Japanese government’s decision to buy a group of disputed islands led rioters to torch dealerships and smash cars. China’s Passenger Car Association predicts Japanese auto brands will lose their collective market-share lead in the country this year for the first time since 2005.

"People are afraid of buying Japanese cars," said Satoshi Yuzaki, Tokyo-based general manager at Takagi Securities Co. "If the situation doesn’t settle and if Japanese carmakers can’t quantify the impact soon, there will be a lasting effect on their earnings."

Honda fell 2.5 percent, the most since Sept. 28, to close at 2,361 yen in Tokyo, where it is based. Toyota, Japan’s largest carmaker and located in Toyota City, dropped 1.5 percent to 3,000 yen and Nissan slid 1.9 percent. By comparison, the Nikkei 225 Stock Average declined 1.1 percent.

Mazda reported Oct. 4 that deliveries in the country tumbled 35 percent to the lowest in 19 months, while Mitsubishi Motors said a day later that Chinese sales plunged 63 percent. Suzuki Motor said Tuesday its sales fell 43 percent.

Automakers from Japan, which as a group have a higher share of China’s market than any other foreign country, are bracing for what may become a bigger crisis in China than last year’s tsunami in Japan, according to the car association. Their share will fall to 22 percent this year from 23 percent in 2011, according to the association.

The territorial dispute over the group of islands - known as Senkaku in Japanese and Diaoyu in Chinese - may cause the Japanese economy to contract this quarter and hasten a current account slide as exports decline and Chinese tourism to Japan drops off, according to JPMorgan Chase.

Toyota and Honda reported damage to dealerships from fire last month, while TV footage showed overturned Japanese cars and window shields smashed by demonstrators in some cities.

Nissan, based in Yokohama, Japan, will weigh the impact of the Chinese protests before deciding whether to revise its sales target there, Executive Vice President Takao Katagiri said on Oct. 5. Japan’s three largest automakers plan to cut production to half of normal levels in China, the Nikkei newspaper reported on Oct. 8.

Dion Corbett, a Tokyo-based spokesman at Toyota, said Tuesday that it’s "looking very difficult" for the company to meet its target of selling 1 million vehicles in China this year.

Slumping sales of Japanese brand cars may have weighed on China’s total vehicle deliveries last month. Auto sales may have increased 2 percent from a year earlier to 1.35 million units, according to the average estimate of nine analysts surveyed by Bloomberg.

Most non-Japanese brands appear to be benefiting.

Volkswagen’s luxury Audi unit boosted sales by 20 percent last month to 35,512 vehicles, according to the German company. Audi last month asked a Chinese dealer to remove a banner advocating the murder of Japanese people after a photograph of the sign went viral on the Internet.

South Korea’s Hyundai Motor and affiliate Kia Motors said Oct. 7 they will probably sell more vehicles in 2012 than the 1.25 million they had projected and that combined deliveries rose 9.5 percent to a record.

General Motors, the largest foreign automaker in China, may be missing out. Monday, the company reported its slowest China sales growth in eight months and said deliveries of Buicks and Cadillacs declined.

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