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Car sales suffer in island spat

11 October 2012, 12:21

Japan — A Sino/Japanese squabble over a remote group of small islands has cost vehicle sales in China.

Sales of Toyota and Honda vehicles dropped significantly in China during September 2012 as anti-Japanese sentiment flared over a territorial dispute that threatens to hobble what was a booming business relationship between Japan and its biggest export market.

Island Tussle

Toyota said on Tuesday, October 9, 2012 that sales of new vehicles in China dropped 48.9% in September from 2011 to 44 100 vehicles. Honda said September sales plunged 40.5% to 33 931 vehicles. China sales for Nissan slid 35.3% in September 2012 to 76 100 vehicles.

The stunning plunge in sales comes after Japan in September 2012 nationalised tiny islands in the East China Sea, called Senkaku in Japan and Diaoyu in China, which had already been controlled by Tokyo but also claimed by Beijing.

The move set off violent protests in China, and a widespread call to boycott Japanese goods. Toyota and Honda dealerships were burned down in one city, and crowds shouting anti-Japanese slogans have gathered and smashed Japanese cars.

Although the flare-ups have calmed in recent weeks, it would still require courage to be seen in a Japanese car in some Chinese cities.

Japanese automakers temporarily closed some of their China factories. Production is back up this week — but reduced to lower levels as demand has collapsed.

Mitsubishi reported that its China sales dived 63% to 2 340 vehicles in September; Mazda said its sales in the country sank 36% to 13 258 vehicles.

A study by JP Morgan, released on Tuesday October 9, 2012, projected Japanese auto exports to China to crash 70% during the October-December period. It said the export of auto parts will slip by 40% — about the same drop estimated for exports of other consumer products such as electronics.

Combined, the aftermath of the territorial spat with China will shave a 0.8 percentage point off Japan gross domestic product growth for the fourth quarter, sending Japan's overall economy slightly downward, instead of the initial forecast for flat growth, according to J.P. Morgan.

China, with its growing middle class, had been one of the emerging markets that Japanese automakers were counting on to boost sales amid a long stagnation in the domestic auto market.

- AP


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