Chinese passenger-vehicle sales unexpectedly shrank for the first time in eight months as a territorial dispute with Japan turned consumers away from buying cars made by Toyota Motor Corp. (7203) to Nissan Motor Co. (7201)
Wholesale deliveries, including multipurpose and sport utility vehicles, fell 0.3 percent to 1.32 million units last month, the China Association of Automobile Manufacturers said in a statement today. That compared with the 1.35 million average estimate of nine analysts surveyed by Bloomberg.
The results undermine CAAM’s forecast for an acceleration in second-half sales, as the slowest economic expansion in three years cools demand for new vehicles. Toyota and Nissan yesterday reported their biggest drops in China sales since at least 2008, while Honda Motor Co. (7267)’s sales were the lowest since May 2011, according to monthly data compiled by Bloomberg.
“We also expect October sales to be weak, probably down for the Japanese autos,” said Steve Man, an analyst with Nomura Holdings Inc. in Hong Kong. “I believe the three automakers, GM, Hyundai and Volkswagen combined will take market share from Japanese carmakers.”
In the first nine months, passenger-vehicle deliveries rose 6.9 percent to 11.27 million units, the association said. Carmakers’ inventory climbed to 776,000 units by the end of September, the highest level this year, said Chen Shihua, head of statistics at CAAM.
Total sales of vehicles, including trucks and buses, fell 1.8 percent to 1.62 million units last month. Exports climbed 48 percent to 109,800 units.
Sales of Japanese cars slumped 41 percent to 160,000 units, cutting their combined market share to 12.2 percent from 20.5 percent a year earlier, according to the association. Chinese car brands posted the second-highest monthly sales this year, delivering 561,900 vehicles for a 7.5 percent gain.
Japanese carmakers may lose their lead among foreign brands in China for the first time since 2005 after rioters torched dealerships and smashed cars in protests over disputed islands. The China slump is the third crisis for the automakers in less than two years, after the Japanese tsunami and Thai floods that destroyed factories and disrupted supply lines.
“The decline in sales will have a direct impact on the earnings of Japanese carmakers,” said Yoshihiko Tabei, a senior analyst at Kazaka Securities Co. “For China, it will mean that Japanese carmakers will see a widening of their losses. Until the political situation settles, it’s difficult to forecast how sales will turn out in the country.”
Toyota’s September deliveries tumbled 49 percent from a year earlier to 44,100 vehicles, Nissan’s fell 35 percent to 76,066 and Honda’s dropped 41 percent to 33,931, the companies said yesterday.
Last week, Mazda Motor Corp. (7261) reported that deliveries in the country tumbled 35 percent to the lowest in 19 months and Mitsubishi Motors Corp. (7211) said that Chinese sales plunged 63 percent. Suzuki Motor Corp. (7269) said yesterday they fell 43 percent.
The China crisis may inflict more economic damage on Japan’s automakers than last year’s tsunami, according to the China Passenger Car Association. Their share will fall to 22 percent this year from 23 percent in 2011, according to the group.
The territorial dispute over the group of islands -- known as Senkaku in Japanese and Diaoyu in Chinese -- threatens a $340 billion trade relationship between Asia’s two largest economies. China central bank Governor Zhou Xiaochuan won’t attend International Monetary Fund and World Bank meetings in Japan this week, sending a deputy instead.
Toyota and Honda reported damage to dealerships from fire last month, while TV footage showed overturned Japanese cars and window shields smashed by demonstrators in some cities.
Nissan, based in Yokohama, Japan, will weigh the impact of the Chinese protests before deciding whether to revise its sales target there, Executive Vice President Takao Katagiri said on Oct. 5. Japan’s three largest automakers plan to cut production to half of normal levels in China, the Nikkei newspaper reported on Oct. 8.
It’s “looking very difficult” for Toyota to meet its target of selling 1 million vehicles in China this year, said Dion Corbett, a Tokyo-based Toyota spokesman.
Corbett said the company is adjusting production based on demand, comments echoed by Nissan spokesman Chris Keeffe.
Nomura Holdings Inc. predicts the three biggest Japanese automakers will cut their full-year net income forecasts, with Nissan reducing the most to 380 billion yen from 409.4 billion yen.
Most non-Japanese brands appear to be benefiting.
Volkswagen AG (VOW)’s luxury Audi unit boosted sales by 20 percent last month to 35,512 vehicles, according to the German company. Audi last month asked a Chinese dealer to remove a banner advocating the murder of Japanese people after a photograph of the sign went viral on the Internet.
South Korea’s Hyundai Motor Co. (005380) and affiliate Kia Motors Corp. (000270) said Oct. 7 they will probably sell more vehicles in 2012 than the 1.25 million they had projected and that combined deliveries rose 9.5 percent to a record. Ford Motor Co. (F), based in Dearborn, Michigan, said today its China sales climbed 35 percent to 59,570 units last month.
General Motors Co. (GM), the largest foreign automaker in China, may be missing out. The company earlier this week reported its slowest China sales growth in eight months and said deliveries of Buicks and Cadillacs declined.
More broadly, demand has slowed this year as China’s economic growth cooled to a three-year low of 7.6 percent in the April-June period. The nation’s services industries expanded in September at the weakest pace since at least March 2011, according to the purchasing managers’ index by the government and Federation of Logistics and Purchasing.
Slowing economic growth is also hitting India’s car sales, with the country’s automakers’ association lowering its full- year forecast to as low as 1 percent.
By comparison, China’s passenger-vehicle sales growth will rise 15 percent to 8.48 million units, driven by demand from first-time buyers and as the economy rebounds, CAAM said in July. Full-year deliveries may increase 11 percent to 16.09 million units, the association has said.
“The situation with the Japanese automakers is unpredictable,” said Ole Hui, an analyst with Mizuho Financial Group Inc. in Hong Kong. “We expect slower growth this year because of the slower economy and because the market still has to digest the high levels of inventory from the first half.”
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