Honda Misses China Sales Goal as Japan Carmakers Lose Traction

Honda Motor Co. missed its 2014 sales target in China amid a cooling economy and greater competition, the last of Japan’s three biggest carmakers to report fewer than expected deliveries in the country.

The Tokyo-based automaker sold 788,276 vehicles, trailing its revised target for 800,000. Its deliveries rose 4.1 percent in the year, helped by a 40 percent gain in December deliveries.

Honda, Toyota Motor Corp. and Nissan Motor Co. are still recovering from a 2012 consumer backlash in China after Japan nationalized a group of disputed islands in East China Sea. The carmakers are facing the slowest Chinese economic growth since 1990, as well as cheaper entry-level models from German luxury brands that have eroded demand for Japanese sedans such as Honda’s Accord.

Japanese carmakers “haven’t reacted fast enough to the changes in the market,” said Zhu Bin, an analyst at LMC Automotive in Shanghai. “In the higher-end sedan segment, they are squeezed by the German brands and are struggling to fight back. Their future doesn’t seem optimistic.”

Honda’s China deliveries of the Accord -- once the country’s top-selling mid-sized sedan -- fell 9.2 percent in 2014, while the CR-V -- formerly the best-selling SUV among foreign brands -- dropped 11 percent. Honda cut its annual China sales target earlier this year by 100,000 units.

Honda has forecast a decline in profit for the 12 months ending in March, the first drop in three years, on mounting costs for recalls and delays in new products.

Toyota Target

Toyota missed its sales projection for 1.1 million units last year, even as the Corolla and the Levin compact cars helped boost sales 13 percent to 1.03 million units. The company kept its target to sell 1.1 million vehicles this year.

Nissan, the country’s most popular Japanese carmaker, said yesterday that sales rose 0.5 percent to 1.22 million units. That trailed a revised projection for 1.27 million units. The Yokohama, Japan-based carmaker blamed the miss on competition in the compact-car and commercial-vehicle segments.

Carmakers have faced complaints from auto dealers saying sales targets are too high, making it hard to get the bonuses they depend on. More than a dozen Beijing dealers for Dongfeng Honda, a Honda joint venture, refused to take new cars in July and August as inventories rose.

Some dealers for FAW-Toyota Motor Sales Co., the sales company of one of Toyota’s Chinese joint ventures, may have to stop selling FAW-Toyotas or shut down because of losses, the China Automobile Dealers Association said last month. The trade group is seeking about 2.2 billion yuan ($354 million) in subsidies from the company to help meet costs caused by excess inventory.

Purchase Limits

Carmakers have also been hurt by Chinese cities’ imposed limits on new vehicles to fight pollution and traffic congestion. The southern city of Shenzhen last month started capping new car license plates at 100,000 a year, following other Chinese cities in setting such quotas.

Japanese brands will be hardest hit by the limit in Shenzhen, since they accounted for more than one-third of the city’s annual vehicle sales, according to LMC’s Zhu.

General Motors Co. and Volvo Cars were among the foreign brands that outperformed the industry. GM, which vying with Volkswagen AG for the top sales spot in China, boosted its deliveries by 12 percent to 3.54 million units last year, compared with the estimated 7.5 percent growth in the industry, according to a statement on the automaker’s website.

China became the largest market last year for Volvo Cars, owned by Zhejiang Geely Holding Group Co., with sales gaining 33 percent to 81,221 units.

Ford Motor Co. sales rose 19 percent to a record 1.1 million units, the carmaker said in a statement today. The carmaker has outsold Toyota -- the world’s biggest carmaker -- in China for a second straight year.

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