Auto Industry

Road rage

Japanese carmakers suffer plunging sales in China

Road rage

As news items go, 2,200 tourists visiting Japan may make for a particularly stirring headline. But in this case it generated some media excitement. That’s because the tourists in question were from China.

WiC has reported in earlier issues that many Chinese have been boycotting Japan as a destination in protest over Tokyo’s purchase of a group of disputed islands (called the Diaoyus in China, Senkakus in Japan). So a cruise ship disembarking Chinese tourists in Kumamoto was big news.

While the red carpet was being rolled out in Japan (the Mainichi Shimbun reported that local Japanese schoolchildren were instructed to hold signs reading “welcome” in Chinese characters for their visitors), the mood back at home in China was more hostile. The China Daily called the trip “controversial” and cited the views of netizens who lambasted the tourists as “traitors” and “putting personal pleasure ahead of national pride”.

Evidently, wider Sino-Japanese tensions are yet to subside. This week Chinese ships attempted to expel Japanese vessels from waters in the disputed area, with the Chinese State Oceanic Administration warning that the Japanese boats were acting “illegally” by infringing China’s sovereignty.

Much of Japanese industry will be disappointed by the news. But its carmakers will probably be some of the most disconsolate. They have suffered more than most in the wake of the dispute. China Business reports that Toyota’s car sales in China plunged 49% in September, in year-on-year terms and this week Honda said the row could see it selling 155,000 fewer vehicles in China this year. That led it to cut its profit forecast for the year by 20% – a move that saw its stock price move sharply lower.

So far Nissan seems to be the least hit of Japan’s big three carmakers. Its China sales slid a ‘mere’ 35%. But it also remains the most vulnerable to a boycott by Chinese buyers. Prior to the maritime row, Nissan sold one in four of its cars in China, versus one in 10 for Toyota.

That means that the company’s CEO Carlos Ghosn recognises that Nissan’s problems in China are substantial ones. “If I was telling you that we can make our sales target and our profit target independently of the heavy hit we took in China, you’d be surprised,” he admitted to the Financial Times.

Ghosn also told the FT that the boycott has made Nissan wary of investing further in China to expand production. Future commitments will be “subject to a lot of scrutiny and analysis”. However, he added that pre-existing commitments will be met, including those for a new factory in Dalian due for completion in 2014 (for more on Dalian’s auto ambitions, see WiC169).

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