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Honda to Nissan Extend China Sales Plunge on Islands Dispute

Nov. 2 (Bloomberg) -- Honda Motor Co. and Nissan Motor Co. joined Toyota Motor Corp. in reporting a plunge in China deliveries for a second month as Chinese consumers shun their cars even after anti-Japan protests have subsided.

Honda’s October sales in the country fell 53.5 percent from a year earlier to 24,115 units, the Tokyo-based company said in an e-mail today. That’s worse than the 41 percent drop in September, when rioters smashed cars and torched dealerships in China during demonstrations against Japan. Nissan said deliveries fell 41 percent last month after reporting a 35 percent decline for September.

Honda, which cut its annual profit forecast by 20 percent this week, said China demand may not return to normal until the Lunar New Year in February. Japanese automakers will probably miss out on sales of about 200,000 units in the fourth quarter as the political stalemate persists, according to an estimate by IHS Automotive, an industry researcher.

“It’s difficult to say if the sales drop has hit rock-bottom yet,” said Kohei Takahashi a Tokyo-based analyst with JPMorgan Chase & Co. “If January-to-March sales are still down 50 percent from a year earlier, it would mean the company isn’t doing anything to recover sales,” Takahashi said of Honda’s decline.

Sales Slump

Honda and Nissan’s October sales declines were their worst monthly drops on record, based on available company figures stretching back to 2007 and 2008, respectively.

Deliveries of Honda’s two most popular models in China, the CR-V sport-utility vehicle and the mid-sized Accord sedan, both fell by more than 50 percent last month, the Japanese company said in the statement today.

Sales of vehicles to Chinese consumers in the first 10 months of the year increased 2.7 percent to 494,108 units, Honda said in today’s statement. The numbers exclude sales of Acura vehicles, said Tomoko Takemori, a company spokeswoman.

Toyota, Asia’s largest car manufacturer, reported yesterday that October deliveries declined 44 percent from a year earlier to 45,600 vehicles, following a 49 percent drop in September that was the most in a decade.

Nissan, the largest Japanese carmaker in the country by sales volume, delivered 64,300 units in October, or 41 percent fewer than a year earlier, according to Chris Keeffe, a company spokesman.

Damaged Vehicles

The automaker, led by Chief Executive Officer Carlos Ghosn, said last month it would reimburse customers for damage to vehicles incurred during past and future anti-Japan protests in China as it worked to lure back customers.

The decades-old territorial dispute, involving a group of islands called Senkaku in Japan and Diaoyu in China, was reignited in April, when then-Tokyo Governor Shintaro Ishihara, a longtime critic of China, proposed buying the territories. That led Prime Minister Yoshihiko Noda’s administration to purchase the islets in September, escalating tensions between the two nations and sparking violent protests across China.

For Japanese automakers, the boycotts against their products follow last year’s tsunami and Thai floods that destroyed factories and disrupted supply lines.

If the political stalemate continues, Japanese automakers may have to focus on other markets apart from China for growth, said Tim Armstrong, an analyst at IHS Automotive based in Paris.

“If it were to become more protracted, it might mean they shift their export pattern a little bit,” he said in an interview in Shanghai last week. “But China is so important, that one of the reasons you would think it might not get out of control.”

To contact Bloomberg News staff for this story: Anna Mukai in Tokyo at; Liza Lin in Shanghai at

To contact the editor responsible for this story: Young-Sam Cho at

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