By on October 29, 2012

The boycott of Japanese goods in China, triggered by a dispute over uninhabited islands in the East China Sea, hit Japanese automakers where it hurts most: In the pocket-book. Honda cut its profit forecast for the fiscal year to March to 375 billion yen ($4.7 billion) from its earlier estimate of 470 billion yen ($5.9 billion), Reuters says.

In September, China sales of Toyota dropped 48.9 percent, those of Honda -40.5 percent, and those of Nissan 35.3 percent. Today, Honda revised its sales forecast down to 4.12 million vehicles from 4.3 million vehicles for the current fiscal, Reuters says.

The Japanese business calendar is the automakers’ biggest enemy. The Japanese fiscal year goes from April 1 to March 31. The boycott started in September, and is expected to be felt for some six month – assuring maximum impact on the books of Japanese automakers. Honda said today they hope things will get back to normal after the February holidays.

Honda announced quarterly results today. More profit forecasts are expected next week when Toyota and Nissan will present quarterly results on Monday and Tuesday.

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17 Comments on “Honda: China Troubles Will Cost Us $1 Billion...”


  • avatar
    MrWhopee

    That poor Odyssey…

    I’m still amazed that there were still people buying Japanese cars in China after these ‘unpleasantness’. Even if you’re a Japanese brand fan boys, I’d be wary about the safety of my car (and thus my family) after such a troublesome period. Unless, of course, the trouble only happens in some areas only (big cities), and not widespread.

  • avatar
    Oelmotor

    What are the losses for the Guangzhou Automobile Group? It is a state owned enterprise with a Toyota joint venture too.

  • avatar
    L'avventura

    Honda, and the rest of the Japanese automakers, should come into the realization that Chinese-Japanese tensions with these islands are here to stay:

    http://thediplomat.com/china-power/why-china-japan-island-dispute-will-persist/

    Neither the Chinese or Japanese side will ever yield or forfeit claims on this issue in the foreseeable future. Under East China seas there is enough oil in that dispute to run China for the next-45 years. With that much at stake these tensions have a risk of flaring-up at any given moment.

    Given this uncertainty, the Japanese should divest themselves from Chinese manufacturing. Basically, they should only make cars and parts in China that they know they can sell there.

    There is a free-trade agreement with China & South East Asia, further moving crucial parts of their supply chain to South East Asia would allow the Japanese to avoid any risks associated with another Chinese flare up and also benefit from cheaper-labour and tariff-free export into the Chinese market.

    This already seems to be happening, as Japanese companies have renewed focus into moving factories towards other parts of Asia. The risk for China is that if the Japanese leave in droves, it takes an inter-connecting network of manufacturers along with them.

    Already there is talk in Taiwan of this possibility and the need to follow the Japanese into S.E. Asia.

    http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20121026000135&cid=1701

  • avatar
    iNeon

    It’s about time politics, alliances and attitudes begin to damage the Japanese automakers. It’s been too long now they’ve been ‘untouchable.’

    • 0 avatar
      L'avventura

      Are you kidding? Japanese automakers have always been incredibly vulnerable to political forces.

      During the late-80s/early-90s Japan-bashing period, the Japanese put an immense effort into American PR and transplanting factories to the US. 2005 also had anti-Japanese riot, 2010 island dispute also saw a blockage of rare-earth metals, which has resulted in Japanese automakers like Honda and Toyota scrambling to recycle and building alternative sources. Then we had Ray LaHood in charge of NHTSA after the US auto bailouts and unintended acceleration witch-hunt, we’ve also seen Nissan-Renault buying into state-owned Autovaz and now dealing with Russian politics (as Japanese build factories in Vladivostok), and now this most recent anti-Japanese riots.

      The fact is, politics are an integral part of the auto-industry. Whether it be state-owned auto companies, bailouts, cutting factory jobs, making plants in Brazil due to protectionism, JVs in China, free trade agreements, dealing with different global emissions and safety regulations, etc. Dealing with the vicissitudes of geopolitics is part of the business.

      • 0 avatar
        iNeon

        No. I’m not kidding.

        You’ll eventually understand that this game affects you very little, and that your continued bell-ringing has all been in vain. Please continue. Your defense on The Truth About Cars will make a difference.

        We all believe in the power of hopes and dreams. If we just hold hands and wish harder; we can make a difference. If we just believe!

        Put a sock in it, dude.

      • 0 avatar
        L'avventura

        @iNeon

        Bell ringing? I’m here discussing the automotive business at site that has something to do with my livelihood. So, yes, this stuff does matter to me.

        I certainly have my opinions, but they aren’t rooted in jingoist falsities like yourself and I didn’t express any in my response to you. And really, you’re the one doing the “bell-ringing”. I merely responded to you with facts of recent events and pointed out your mistake.

      • 0 avatar
        iNeon

        I don’t need an education from a wordy stranger on the internets. Find someone else that will support your personal interests after listening to your arguments– I am not that man.

      • 0 avatar
        L'avventura

        @iNeon

        “Wordy stranger”. That’s a new one.

        I’m not trying to educated you. But I’m surprised that you find so much offence that someone responded to you on a public forum. After all, you were the one trying to do the ‘convincing’.

      • 0 avatar
        iNeon

        You seem to be under the impression that your relaying information, personal or otherwise, will prove a different outcome. This is simply not true. I’m a luddite– a semi-xenophobe from Alabama. You haven’t lost much in the way of an ally– so give it up already.

        I repeat: It’s about time politics, alliances and attitudes begin to damage the Japanese automakers.

      • 0 avatar
        L'avventura

        @iNeon

        You seem to be under several misconceptions:

        First, that I’m trying to convince you of anything. I’m not, I was merely correcting you and halting the spread of your misinformation.

        Second, you seem to also mistake what my response to you was. I was correcting you on the fact that the Japanese were ‘untouchable’, that its ‘about time’ that the politics damaged the Japanese.

        Again, to summarize, my response was the Japanese have always been vulnerable “politics, alliances and attitudes”. They were never ‘untouchable’ as you claim, to the contrary, they have been more vulnerable than automakers from other countries to political damage (I’ve given examples in my post above).

      • 0 avatar
        iNeon

        1) Keep telling yourself that. All’s I know is: you’ve made this thread 4x longer than need be– because you’ve got money on this game and feel that it’s somehow altruistic to argue for the Japanese side of this skirmish.

        2) It was my opinion and there’s no need for you to bust in and carpet-bomb a thread with your pro-Japan B.S.

        To summarize: I ain’t give two spits. It is Monday night and the only thing on was Star Wars I-III. I had nothing better to do than to side with the Chinese– and I hold them in as much as the Japanese. :) Have a good Tuesday, and enjoy driving your Honda to work!

    • 0 avatar
      L'avventura

      @iNeon

      Its your personal attacks that have made this thread long as well as your inability to be corrected.

      Also, how is me saying that Japan is NOT ‘untouchable’ pro-Japanese? And that the Japanese have long been vulnerable by “politics, alliances and attitudes”. My other comments here, outside this thread, reflect more factual opinions, that the island dispute won’t be resolved in the near-term, that they should re-focus on SE Asia, and that Honda is naive to think that sales will be normal in 6 months.

      Also, while I genuinely enjoy these exchanges, don’t flatter yourself, this conversation isn’t about you. I like discussing the business of cars, particularly about Asia, and I’m stuck indoors due to hurricane Sandy so there is nothing better to do.

  • avatar
    L'avventura

    According to the WSJ, the billion cut in forecast is not from the drop in China alone, but mostly from higher costs associated with North American and other Asian markets.

    http://online.wsj.com/article/SB10001424052970204840504578085712501067192.html?mod=WSJ_hp_LEFTWhatsNewsCollection

    Given how Honda is scrambling to refresh their critically panned Civic in the US that isn’t surprising. Operating income for North America tanked 44%. It also had to spend more money in ads and incentives to clear out older Accords for the new Accord launch.

  • avatar

    This is the dumbest thing I’ve ever heard. I can (sort-of) understand boycotting Japanese products in China, but smashing, crushing and burning other people’s property? That’s just ridiculous. And the most-ironic bit is that it actually hurt China worse than Japan.

    • 0 avatar
      L'avventura

      Its actually much worse than destroying other people’s property. The last protest even escalated to the point where a Chinese Corolla driver near beaten to death and has been paralysed by an angry mob.

      http://shanghaiist.com/2012/09/24/xian_car_owner_attacked_in_his_head.php

      We have to keep these events in context. Buying a Japanese car in China means you may not only have to worry about your property but your physical well being as well. The impact to Japanese brands will be much longer lasting than the 6-months Honda thinks.

  • avatar
    dbcoop

    I thought that the animosity between these two countries goes back a long ways before this dispute over islands. I read somewhere that Japan dislikes China so much they won’t even let their citizens into the country on Visas to do the most grueling manual labor jobs.


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