Toyota reported China sales down 40% in September, affected by the territorial dispute between the two nations.

Since the mid-September Chinese protests, Japanese showroom traffic and sales have dramatically decreased in the country. As China is one of Toyota’s most important markets, a prolonged sales hit may affect the company’s profit forecasts.

Last month Toyota sold around 50,000 vehicles in China, according to a senior company executive, down from 86,000 units in September 2011. The fall in Japanese sales, meant an unexpected boom for the foreign brands, such as South Korea’s Hyundai which saw its sales up 15% to 84,188 units in China last month.

As demand decreased over the past weeks, Toyota, Honda and Nissan have been forced to cut production, a move that could extend through November. Toyota might give up its target of 1 million vehicles sold in China by the end of this year.

“I would say it’s almost impossible now,” the executive said, blaming the wave of anti-Japan sentiment that has swept the country.

This week Mazda announced its sales have dropped by more than a third in September and Nissan is still expected to report its last month situation.


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