Toyota Motor Corp. (7203), Nissan Motor Co. (7201) and Honda Motor Co. (7267) signaled Chinese production cuts may deepen this month after anti-Japanese protests flared in the world’s largest vehicle market.
Nissan lowered August output in China, its largest market by volume, 8.9 percent from a year earlier to 86,488 units, the Japanese carmaker said today. Chinese production fell 18 percent to 67,625 vehicles at Toyota, Asia’s biggest automaker, and declined 10 percent at Honda.
Officials at the Japanese automakers said sales and production are poised to worsen in September after anti-Japan protests over disputed islets in the East China Sea escalated, with some demonstrators torching auto showrooms and smashing cars. Japanese autos will lose their lead this year over German nameplates in the country for the first time since 2005, China’s Passenger Car Association estimates.
“You can’t leave the Chinese market, but you may try to move the production line out of China for the time being,” said Yuuki Sakurai, president of Fukoku Capital Management. Investor demand for the automakers’ shares “depends on how the companies are going to cover these risks,” he said.
Nissan fell 2.6 percent to 664 yen at the close in Tokyo trading, while Toyota dropped 2.7 percent and Honda declined 4.2 percent.
“The impact from the anti-Japan protests are not yet reflected in the August numbers,” said Yurika Motoyoshi, a Toyota spokeswoman. “Last year’s numbers were unusually high as we recovered from the earthquake and tsunami. We’ve already seen that orders are declining, so the protests’ impact will be shown in the September numbers.”
Nissan said today it’s halting Chinese production three days ahead of schedule to reflect demand, while Toyota said that it’s suspending output from today until Oct. 8 at plants in Guangzhou and Tianjin, and at its Sichuan FAW plant starting Sept. 29.
Nissan will suspend production in China from Sept. 27 and resume output on Oct. 8 in view of the “current market situation,” Chris Keeffe, a spokesman for the company, said by telephone today. The company makes cars in the country with Dongfeng Motor Corp. (489)
“In previous years, they often added shifts around this time to meet rising demand during hot sales season in September and October,” said Han Weiqi, a Shanghai-based analyst with CSC International Holdings Ltd. “Japanese automakers will see their market share being taken away by American and European automakers, as consumers who need to buy cars will simply turn away and buy other brands.”
Japanese car brands’ China market share will probably fall to 22 percent this year, while German marques will increase theirs to 22.5 percent, according to China’s Passenger Car Association.
Combined sales of Japanese automakers fell last month in China, compared with gains of more than 10 percent for German, U.S. and South Korean vehicles, according to the China Association of Automobile Manufacturers.
Some dealerships selling competing brands have introduced marketing campaigns to attract buyers shunning Japanese cars.
A Buick showroom in eastern Zhejiang province is offering cash rebates and gift bags to buyers who trade in their Japanese cars, according to Chen Linling, a saleswoman at the dealership.
“Business has been quite good and we’ve been busy since we started the promotion,” Chen said by telephone. “We rolled out this marketing move after the Diaoyu protests in China.”
A similar dispute over sovereignty of islands known as Dokdo in South Korea and Takeshima in Japan has drawn more attention since South Korean President Lee Myung Bak visited the islands on Aug. 10. Japanese auto sales also fell in South Korea last month.
Taiwan also claims sovereignty over the islets China calls Daiyou and Japan named Senkaku.
“If the Chinese, Koreans and maybe the Taiwanese are not willing to buy Japanese cars, the sales of Japanese automakers will suffer, and so will their share prices,” Sakurai of Fukoku Capital said.
Total sales of Japanese carmakers in South Korea dropped 12 percent and importers attributed the decline to the dispute, according to a statement e-mailed from the Korea Chamber of Commerce and Industry.
Japanese carmakers had been increasingly looking toward China sales as the end of a government subsidy for fuel- efficient cars in Japan stymied domestic demand growth.
Nissan generates about 30 percent of its profit in China, compared with 17 percent at Toyota and 15 percent at Honda, Goldman Sachs Group Inc. estimates.
Toyota will adjust Kyushu plant output as demand fell in China, it said yesterday. Toyota makes mostly Lexus vehicles at plant in the southwestern Japan island.
To contact the editor responsible for this story: Young-Sam Cho at email@example.com