Japanese automakers have reported sharp drops in sales in China, while other international brands have seen increased sales in the country during October.
IHS Automotive perspective | |
Significance | As the territorial dispute between China and Japan over the Diaoyu/Senkaku Islands in the East China Sea neither subsides nor escalates, Japanese branded vehicles continue to see a rapidly shrinking market share in China. |
Implications | The political situation between China and Japan has stalled with no immediate outcome to the ownership dispute over the Diaoyu/Senkaku Islands, forcing Japanese automakers and suppliers to reanalyse their forecasts for the Chinese market. |
Outlook | As Japanese automakers see declining demand for their cars, South Korean and North American, as well as German, brands are expected to steal market share. |
Japanese automakers report declining sales, readjust targets
Nissan Motor's sales in China in October have dropped 40.7% year-on-year (y/y) to 64,300 units. In the first 10 months of the year, the Japanese automaker has seen sales drop 0.4% y/y to 1,011,600 units, the Jiji Press reports. Nissan has a sales target of 1.35-million units for this year. Nissan, however, claims that sales picked up in the second half of the month, leading the automaker to hope that the situation is calming and that sales may in the near future return to normal growth rates.
Honda Motor has reported sales falling in October with sales down 53.5% y/y to 24,115 units. In the first 10 months of the year, Honda has seen sales rise 2.7% y/y to 494,108 units. However, despite the rise overall, the automaker saw a faster growth rate during January–September with sales increasing 9.5% y/y in the first nine months in China. Honda has revised its annual sales target for China to 620,000 units this year, down from its previous target of 750,000 units.
Toyota Motor's sales in October dropped 44.1% y/y to 45,600 units.
Mitsubishi Motor has adjusted its sales targets for the year, reducing it by more than half. Mitsubishi had originally planned to sell 47,500 units during April 2012 to March 2013 period. The automaker will now aim to sell 20,000 units during the period in China.
Fuji Heavy has also reported a nosedive in sales during October, with Chinese sales decreasing 71.7% y/y to 1,468 units during the month.
Non-Japanese international brands begin to report rises in October sales
Shanghai General Motors, the joint venture between General Motors (GM) and SAIC Motor, has reported a 12.5% y/y increase in October sales. The automaker has sold 120,909 units in the first 10 months of the year. The rise during October is faster than seen in previous months. In the first 10 months of the year, SGM sold 1.14-million units, up 10.3% y/y.
South Korean automaker Hyundai Motor has reported a jump in October sales in China with monthly sales of 80,598 units, an annual increase of 37% y/y.
Outlook and implications
Japanese automakers began to see declining growth in sales in China during August as nationalist sentiment in China began to grow due to Japan's government's purchase of the Diaoyu/Senkaku Islands from a Japanese private owner. The islands, which are claimed by both countries, have historically been a sore point between the two nations, but events this year have led to rising nationalist sentiment on both sides regarding the ownership of the islands (see China: 22 October 2012: Sudden drop in Japanese-brand car sales in China). The sudden drop in sales for Japanese automakers is giving a sudden impetus to other international brands in China.
IHS Automotive expects that the immediate result of the dispute between Japan and China will be a sudden drop in production of Japanese car production plants in China, with an estimated lost output of 300,000 units (see China: 19 October 2012: Japanese OEMs to lose 300,000 units of production in China). Exports from Japan to China are also slowing, with some Japanese automakers halting imports into China completely. I Imports into China of luxury brands such as Nissan's Infiniti and Toyota's Lexus have now been halted for the short term. Japanese suppliers, meanwhile, are reconsidering expansion plans, as the outcome of the Diaoyu/Senkaku Islands dispute may linger on longer than previously anticipated because neither government seems ready to compromise. IHS Automotive's forecasts are to be reanalysed accordingly.