Japan car sales in China tumble, hit by islands row

Tue Oct 9, 2012 4:12am EDT
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By Fang Yan and Yoko Kubota

BEIJING/TOKYO (Reuters) - Japanese car makers reported tumbling sales in China for September - with Toyota's almost halving - confirming the impact of a territorial row between the two countries and raising concerns about their future in the world's biggest auto market.

Violent protests and calls for boycotts of Japanese products broke out across China in mid-September after Japan nationalized two of the East China Sea islands, known as the Diaoyu in Chinese and the Senkaku in Japanese, by purchasing then from their private owners.

Toyota Motor Corp (7203.T: Quote) said on Tuesday that sales in China fell 48.9 percent in September from a year earlier, while Honda Motor Co (7267.T: Quote) reported a 40.5 percent slide in its sales there.

Nissan Motor Co's (7201.T: Quote) China auto sales, including imports, fell 35.3 percent in September from a year earlier, according to its China venture partner Dongfeng Motor Group Co (0489.HK: Quote). Suzuki Motor Corp (7269.T: Quote) said shipments to dealerships in China fell 42.5 percent last month from a year earlier.

"Inventories are growing, factories are operating less, and retail is not going well at all," said Koji Endo, a senior analyst at Advanced Research Japan.

"It'll be the German and South Korean makers that will take over share from the Japanese brands when Japanese cars sell less. I don't see a single factor that is positive (for the Japanese brands)."

While the street protests have eased, China has sent its patrol ships into what Japan considers its territorial waters near the islands in recent weeks, prompting Tokyo to lodge protests against Beijing.

Analysts say that sales for Japanese car makers, which together had just over a fifth of the Chinese auto market before the protests, could continue to weaken as long as the diplomatic tension remains.   Continued...

A visitor is reflected in a Toyota Motor Corp's vehicle displayed at the company's showroom in Tokyo September 26, 2012. REUTERS/Yuriko Nakao