Slow recovery for Japanese automakers on the Chinese market due to political tensions image

Intermittent bouts of tensions between Asia’s two largest economies underscore the risks of a prolonged consumer backlash against Japanese auto brands, which have lost a fifth of their market share in the past year.

Nationwide protests erupted across China last September after Japan moved to purchase a group of disputed islands — known as Senkaku in Japan and Diaoyu in China — from their private owner one year ago yesterday.

Thousands of Japanese cars were vandalized and businesses attacked by mobs in the demonstrations. The ensuing consumer backlash sent Toyota and Honda to their first annual sales declines on record in the world’s largest vehicle market. Japan lodged a diplomatic protest to China after eight Chinese Coast Guard ships entered Japan-controlled waters on Sept. 10 near the island chain being claimed by both nations.

According to Nissan, the biggest Japanese carmaker in China by volume, its sales are down more than 6% in the country during the first eight months of this year, even as industry wide passenger-vehicle sales increased. Toyota’s deliveries have declined 5.3% in the same period, while Honda slid 2.9%.

“In China, there are several issues, ranging from the political situation between the two countries, the slowdown of the Chinese economy and the products we sell in the market,” said Toyota Executive Vice President Nobuyori Kodaira. “Our aim is to carefully respond to what our Chinese customers want and to raise our efforts in meeting those needs.”

Honda said the political issue won’t affect its long-term plans in China and the automaker expects sales this year to surpass last year. Nissan’s sales in China haven’t fully recovered, though it’s on track to achieve its plan this year, said Yoshiko Tsumagari, a spokeswoman for the company.

Ford has emerged as the biggest winner from the political tension between China and Japan, as deliveries of the American manufacturer have jumped 50% in the first eight months of this year, driven by sales of its Focus compact and Kuga and EcoSport SUVs.

Via Bloomberg