Japanese automakers paring down in China

All the brouhaha over Japan and China’s turf war in the East China Sea has led major Japanese automakers to cut down their operations and expectations in China.

The New York Times, via Reuters, is reporting that Toyota and Nissan are among the companies affected by rounds of anti-Japanese protests in China as of late. And though production slowdowns are normal, the cause of this one is not so much:

“Steps by the Japanese automakers to cut output in China are an anomaly in a market that has driven the industry’s global growth over the past decade and where most automakers had been adding capacity until China’s economic slowdown in recent months. The slowdown caused production to outpace sales, resulting in larger-than-normal inventories for many car dealers.

‘For the time being I think you’re going to see Japanese automakers’ sales in China down by 20 to 30 percent,’ said Koji Endo, auto analyst at Advanced Research Japan, a firm dealing in investment information. ‘The last time we had protests like this, in 2010, the effects only lasted about a month, but I think this time is going to be different. This is going to have a serious impact.’

Nissan, one of the top Japanese automakers in China, said that it would halt production at a joint venture in China starting Thursday, three days earlier than planned, and would extend the halt through the national holiday period next week.

Toyota plants in Tianjin and Guangzhou will also suspend production, from Wednesday through the holiday, a Tokyo-based spokeswoman, Shino Yamada, said. That closing will be a few days earlier than planned.

Production at factories in China may be curtailed further, depending on market conditions, she said.”

It’s ridiculous, we know, but apparently hard feelings and anti-Japanese sentiment have more to do with the slowdown than, say, China’s recent economic slowdown. In fact,  Bloomberg Business Week is reporting that German vehicles are set to take over the Chinese market.

“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.'”

What do you think? Is it really all about Diaoyu, or is China’s economy more to blame?

Read more on China, France, America and the world beyond in the latest edition of Carnet Atlantique! And keep your eyes on this space–our October issue goes live soon! With everything you want to know on life in France, Chinese expats, presidential elections and more!

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