By on November 1, 2012

Toyota’s  China sales  dropped 44.1 percent year-on-year to about 45,600 units in October, The Nikkei [sub] says. Toyota confirmed the number. A territorial dispute over  uninhabited rocks in the East China Sea triggered a massive boycotts of Japanese goods, especially of high-profile cars. In September, Toyota’s China sales were down 40 percent in September.

Last month, dealerships of Japanese cars were torched, Japanese cars were overturned and drivers beaten. The demonstrations have since stopped. Now, it’s no longer the loss of the car that worries Chinese, but the loss of face. Which possibly is more powerful in the long-term.

“I am supposed to impress people with my car,” says a friend in China. “I don’t want to apologize for it.”  The friend expressed intentions to trade the current Corolla to “something from Volkswagen.”

All Japanese carmakers are hit by the boycott, and similar sales reductions are expected from Toyota’s peers. Among Japanese carmakers, Nissan has the highest exposure to the Chinese market. In 2011, Nissan sold 883,000 vehicles in China, some 27 percent Nissan’s global sales. For Honda, that ratio was about 20 percent, or Mazda, some 18 percent. Toyota’s China sales accounted for approximately 12 percent of its global sales in 2011. This year, the ratios were a bit lower when budgeted, and most likely will sink further.

The row is expected to have a bigger effect on company earnings. Sales in China are known to be quite profitable.

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