The Truth About Cars » islands http://www.thetruthaboutcars.com The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Mon, 28 Jul 2014 21:27:46 +0000 en-US hourly 1 http://wordpress.org/?v=3.9.1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars editors@ttac.com editors@ttac.com (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » islands http://www.thetruthaboutcars.com/wp-content/themes/ttac-theme/images/logo.gif http://www.thetruthaboutcars.com Island Issue Still Keeping Japan’s China Sales In Check http://www.thetruthaboutcars.com/2013/07/island-issue-still-keeping-japans-china-sales-in-check/ http://www.thetruthaboutcars.com/2013/07/island-issue-still-keeping-japans-china-sales-in-check/#comments Tue, 02 Jul 2013 17:17:54 +0000 http://www.thetruthaboutcars.com/?p=493949

Japanese carmakers are not out of the woods yet in China, and might be in the thick of things again if matters flare up. The other day, 30 right wing Japanese activists had to be kept away by Japanese Coast Guard, while the US and Japan held war games in preparations for a possible Chinese invasion of the Senkaku/Diaoyu Islands.

  • Toyota said sold 76,900 vehicles last month in China, up 9 percent.
  • Nissan’s China sales dropped 7.7 percent in June to 101,400 units.
  • Honda’s sales slid 5.6 percent to 61,003 units.

According to The Nikkei [sub], Japanese auto makers held a 14.5% share in the January-May period,, down from 16.4 percent share in 2012 and 19.4 percent in 2011.

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Did Anyone Mention Islands? Chinese Buy Japanese Again http://www.thetruthaboutcars.com/2013/05/did-anyone-mention-islands-chinese-buy-japanese-again/ http://www.thetruthaboutcars.com/2013/05/did-anyone-mention-islands-chinese-buy-japanese-again/#comments Wed, 08 May 2013 14:38:33 +0000 http://www.thetruthaboutcars.com/?p=487828

Found around the corner from Toyota

It’s not quite the all clear, but Japanese automakers (and their government-owned Chinese joint-venture partners) breathe a bit easier after receiving April sales numbers for China. Numbers had been down severely after last September’s anti-Japan riots. Latest “figures suggest that the firms are closer to recovering their lost sales,” says The Nikkei [sub].

Japanese Brands
China, April 2013
Honda -2.4%

Nissan
2.7%

Toyota
-6.5%
Suzuki -24.0%

Mazda
-25.2%

Honda, which was one of the hardest hit last October, is  down only 2.4 percent year-on-year. Nissan even eked-out a 2.7 growth for April. Toyota  is down 6.5 in April, but Toyota managers don’t miss a chance to mention that some of the problems are theirs, and that new product is needed and on its way.

As the table shows, some Japanese automakers wish they would be that lucky.

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Island Row Can Turn Ugly Again http://www.thetruthaboutcars.com/2013/04/island-row-can-turn-ugly-again/ http://www.thetruthaboutcars.com/2013/04/island-row-can-turn-ugly-again/#comments Tue, 23 Apr 2013 13:34:13 +0000 http://www.thetruthaboutcars.com/?p=485990

As predicted by TTAC after Chinese demonstrations against Japan’s control of the Senkaku/Diaoyu islands turned into violence against Japanese cars and car dealerships in China, the matter turned into a severe sales setback for Japanese car companies in China, more severe than initially thought, or hoped. Also as predicted by TTAC, the islands did affect the sales of Japan’s carmakers more than the tsunami.  Last Saturday in Shanghai, Toyota’s China chief confirmed that the pain would be felt at least through August.  This was before he heard the really bad news.

On Sunday, three ministers of Japan’s government visited the Yasukuni Shrine in Tokyo, a place where Japan’s A-Class war criminals along with other war dead were put to an uneasy rest.  These visits had enraged China’s rulers in the past, and they did so again. Severely.

Making matters worse, a flotilla of boats carrying more than 80 Japanese nationalists arrived in waters near the islands on Tuesday . The flotilla of 10 boats was tracked by eight Chinese government ships, while ships of the Japanese Coast Guard tried to chase off both Japanese nationalists and Chinese government boats. The Nikkei [sub] says that “a record number” of Chinese are in Japanese waters, causing fears that “tensions between the two East Asian powers may be returning after a period of relative calm.”

Renewed tensions will trigger a flare-up of  anti-Japanese discussions in Chinese social media, which won’t help the still lagging sales on Japanese cars in China. New ugly demonstrations would put a serious dent into Japanese plans for China. Japanese carmakers most likely won’t be too sympathetic for the Sunday outings of their ministers.

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Japanese Auto Sales In China Way Down Crawling Back To Normal http://www.thetruthaboutcars.com/2013/03/japanese-auto-sales-in-china-way-down-crawling-back-to-normal/ http://www.thetruthaboutcars.com/2013/03/japanese-auto-sales-in-china-way-down-crawling-back-to-normal/#comments Mon, 04 Mar 2013 12:49:57 +0000 http://www.thetruthaboutcars.com/?p=479978

As expected, sales of Japanese cars in China took a nosedive to levels not seen since the days after Japanese cars and dealerships were torched last September. Sales of Nissan and Toyota are down a whopping 46 percent. No, it’s not a new flare-up of anti-Japanese riots. This time, it’s the effect of the Chinese Lunar calendar.

Chinese Sales By Japanese Brands
Sept Oct Nov Dec Jan Feb Jan/Feb
Toyota -49.0% -44.1% -22.1% -15.9% 23.5% -45.7% -13.30%
Nissan -35.0% -41.0% -29.8% -24.0% 22.20% -46.00% -14.10%
Honda -41.0% -54.0% -29.2% -19.2% 22.00% -27.00% -4.00%
Data: Companies via Reuters, Nikkei

In January, sales of all cars in China, including Japanese, were up compared to January 2012, simply because Chinese New Year fell into February. February sales of all cars will be reported as way down, simply because China was closed.

Instead of this whacko chart that shows January and February sales, and that does nothing except making people dizzy…

… we present you with consolidated sales for both months to get rid of the calendar effect. As you can see, five months after the anti-Japanese riots, sales of cars with Japanese nameplates are still hurting in the Middle Kingdom. There is a steady trend towards normalization, but it is tough slogging. Considering that the Senkaku/Diaoyu issue remains in the news in China, the Japanese crawl back to normal is remarkable. When all is said and done, and assuming no real flare-up, Japanese carmakers will have lost a full year of growth in China.

P.S.: I am looking forward to reading how the merry spinsters at GM sell their huge (calendar-induced) February loss of sales in China … Currently, mum’s the word.

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Toyota’s China Sales Way Up! Is Peace Breaking Out? http://www.thetruthaboutcars.com/2013/02/toyotas-china-sales-way-up-is-peace-breaking-out/ http://www.thetruthaboutcars.com/2013/02/toyotas-china-sales-way-up-is-peace-breaking-out/#comments Sat, 02 Feb 2013 15:10:28 +0000 http://www.thetruthaboutcars.com/?p=476118

Toyota, along with its Japanese peers, has wallowed in double digit minus territory in China, ever since cars were upturned and dealerships torched in September over a few uninhabited rocks in the East China Sea. In January, China sales of Toyota shot up 23.5 percent compared to the same month a year earlier. Are Japanese fortunes in China finally turning to the better?

Sales lost by Japanese brands
Sept Oct Nov Dec Jan
Toyota -49.0% -44.1% -22.1% -15.9% 23.5%
Nissan -35.0% -41.0% -29.8% -24.0%
Honda -41.0% -54.0% -29.2% -19.2%

 

We don’t think so. Neither does Toyota. “The results are higher than a year ago as the Spring Festival fell in January last year,” Toyota told Reuters . Like every year, we are faced with a phenomenon called Chinese New Year. It is hard to grasp unless you have been there, endured WWW III-equivalent fireworks for a month, and lived through closed shops for weeks. Trust me: Something really serious is going on when Chinese close their shops.  For the weeks surrounding Chinese New Year, China is for all intents and purposes closed.

Should someone want to attack China, do it during Chinese New Year, the General Staff, their aides and mistresses will all be vacationing in Thailand while the soldiers are back with their families, eating dumplings and hoping to get the one with the coin. Last year, Chinese New Year was on January 23, and sales tanked across the board. This year, Chinese New Year starts on February 10.

The year of the snake can be treacherous. When Chinese new car sales will be announced next week (unless the CAAM did already “beat the traffic” and is on vacation,) January numbers will be glorious. February numbers, announced in March, will be horrendous. With the help of TTAC, you can crease your forehead and announce: “January sales in China will go to the Moon, but in February, that bubble will burst. Want to bet?” It’s a sucker bet, try it. If you can find that sucker, TTAC can make you rich.

Likewise, Japanese sales will be way down in February, percentage-wise. Ye Sheng, an analyst at Ipsos, told Reuters that“focus should be on the first-quarter data rather than monthly figures.” We agree. A year ago, we told you, and we will tell you again: “Ignore any numbers coming from China in January or February, especially percentages.”

As for the sales of Japanese brands in China, I  expect continued rough sledding. As you can see from the chart, sales have improved, along with huge marketing activities and discounts. In China, to drive a foreign-branded car is a sign of achievement. After the riots, driving a Japanese-branded car caused loss of face. This will not go away over night.

Toyota thinks likewise, and cautiously plans for 900,000 units to be sold in China this year. That would be 2 percent above the 2011 crisis level. In 2012, Toyota’s sales in China dropped nearly 5 percent to 840,000.

Japanese OEMs, along with their Chinese joint venture partners, see their profits suffer from  the islands spat.  We will probably hear more this coming week when Nissan and Toyota will announce their quarterly results.

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Japanese Carmakers, Profits Suffer From Island Row In China http://www.thetruthaboutcars.com/2013/01/japanese-carmakers-profits-suffer-from-island-row-in-china/ http://www.thetruthaboutcars.com/2013/01/japanese-carmakers-profits-suffer-from-island-row-in-china/#comments Thu, 31 Jan 2013 13:23:30 +0000 http://www.thetruthaboutcars.com/?p=475921

Honda made cautionary noises when announcing its quarterly numbers today, taking its annual profit forecast for the year down a notch to 370 billion yen ($4.1 billion). Three months ago, Honda already had 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). $1.8 billion evaporated on the forecast, mostly due to continuing sales troubles in China.

In China, Honda sold 604,000 vehicles in 2012, way below its initial goal of 750,000. The pace of recovery in China is slower than Honda had expected, Executive Vice President Tetsuo Iwamura told Reuters.

Analysts had expected a cheerier outlook, based on the fact that the yen has finally reversed its trend and is going down against major currencies. This turns overseas profits into more yen, and it helps exports.

Honda’s announcement throws a shadow over the financials of Toyota (Tuesday) and Nissan (Friday). Especially Nissan is very dependent on China. Nissan’s December sales were down 24 percent in China, Honda lost 19.2 percent , those of Toyota were down 15.9 percent.

The fiscal year of Japanese carmakers ends on March 31, 2013.

 

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Japanese Cars Continue To Suffer In China http://www.thetruthaboutcars.com/2013/01/japanese-cars-continue-to-suffer-in-china/ http://www.thetruthaboutcars.com/2013/01/japanese-cars-continue-to-suffer-in-china/#comments Mon, 07 Jan 2013 15:19:18 +0000 http://www.thetruthaboutcars.com/?p=472583  

Sales of Japanese car in the world’s largest car market, China, continue to be impacted by the war of words (and occasionally sledge hammers) over uninhabited rocks in the East China sea.  Sales are inching up a bit after customers dare to come back to the showrooms of Japanese brands.

Sales Of Japanese Carmakers In China
December Full Year 2012, Units YoY
Toyota -15.9% 840,500 -4.9%
Nissan -24.0%
1,181,500
-5.3%
Honda -19.2% 598,577 -3.1%
Data: Companies via Reuters, Nikkei

This is the way it looks in December. Sales are still down by the double digits for the month. Sales are down only slightly for the year, but this is because the trouble started in September, and before that, sales were good.  The next months likely will look similar, with a slight uptrend.  It will be a while until Japanese carmakers have regained trust and market share in China. Data as reported by Reuters and The Nikkei.

In Japan, the numbers will look different. Japan is on a fiscal year, which goes from April through March. The current fiscal will be impacted by seven months of slow sales in China.

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Chinese Brands Continue To Profit From Japanese Woes, Germans Not So Much http://www.thetruthaboutcars.com/2012/12/chinese-brands-continue-to-profit-from-japanese-woes-germans-not-so-much/ http://www.thetruthaboutcars.com/2012/12/chinese-brands-continue-to-profit-from-japanese-woes-germans-not-so-much/#comments Thu, 13 Dec 2012 14:23:58 +0000 http://www.thetruthaboutcars.com/?p=469985 Market share by country, passenger vehicles, w/o SUV

The island row does not make headlines anymore in China where people focus on the once in a decade transition of power. Japanese carmakers however still feel the pain. Two countries appear to be the winners: China and Germany.

Market Share Passenger Vehicles w/o SUVs
Jul Aug Sept Oct Nov
Japan 21.1% 20.0% 13.2% 9.0% 13.00%
Germany 25.1% 25.8% 24.1% 27.0% 23.24%
U.S.A. 16.0% 16.6% 17.1% 17.0% 16.97%
S-Korea 9.8% 10.3% 10.7% 10.7% 10.73%
France 3.7% 3.7% 4.6% 4.7% 4.30%
China 24.3% 23.5% 30.3% 31.3% 31.32%
Source: CAAM

Sales of Japanese-branded have rebounded slightly from their October low in November, as their share of the passenger-car market (not counting SUVs) rose from 7.61% in October to 11.65% in November. Sales are far away from their former market-leading glory.

Three trends become evident:

  • Chinese brands are up solidly.
  • German-branded cars are can easily take the place of Japanese in the Chinese customer’s mind, but can just as quickly lose the gains.
  • American, Korean, and French brands profit only slightly from the market dislocations.

And here the data for passenger vehicles including SUVs:

Market Share Passenger Vehicles w/ SUVs
Jul Aug Sept Oct Nov
Japan 19.8% 18.6% 12.2% 7.6% 11.65%
Germany 20.4% 20.8% 19.3% 21.6% 18.46%
U.S.A. 11.8% 12.3% 12.8% 12.5% 13.06%
S-Korea 8.7% 9.1% 9.7% 9.7% 9.78%
France 2.6% 2.7% 3.3% 3.3% 3.04%
China 36.7% 36.4% 42.7% 45.1% 43.70%
Source: CAAM

All data supplied by the China Association of Automobile Manufacturers (CAAM). Data reflect deliveries from automakers to dealers, not sales from dealers to end users.

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Tokyo Paper: Toyota To Delay New Factories in China http://www.thetruthaboutcars.com/2012/12/tokyo-paper-toyota-to-delay-new-factories-in-china/ http://www.thetruthaboutcars.com/2012/12/tokyo-paper-toyota-to-delay-new-factories-in-china/#comments Sun, 09 Dec 2012 15:49:40 +0000 http://www.thetruthaboutcars.com/?p=469594

Toyota decided to postpone construction of a new plant in Tianjin, China, and is considering the delay of another new plant in Guangzhou, Japan’s Asahi Shimbun writes, quoting unidentified sources. This due to sluggish vehicle sales in the wake of anti-Japan protests over the Senkaku/Diaoyu islands dispute, Asahi Shimbun’s sources said.

The two plants were expected to raise Toyota’s production capacity by 40 percent to 1.3 million units.

Reuters reports the same story, but is less definitive than the Asahi which claims as a fact that Toyota “will set a new construction schedule after examining sales trends in China,” and that Toyota “estimates it will take at least a year to regain their previous levels.” On Friday, another Japanese paper claimed that Toyota expects that it would take more than a year for Chinese sales to recover.

Toyota spokespeople were dismissive on Friday and could not be reached over the weekend.

If the slump in China indeed takes longer, the damage would not be isolated to Toyota. For the last three months, other Japanese manufacturers were similarly effected,

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China Row Could Be Worse Than Tsunami, Effects Could Last More Than A Year http://www.thetruthaboutcars.com/2012/12/china-row-could-be-worse-than-tsunami-effects-could-last-more-than-a-year/ http://www.thetruthaboutcars.com/2012/12/china-row-could-be-worse-than-tsunami-effects-could-last-more-than-a-year/#comments Fri, 07 Dec 2012 14:23:57 +0000 http://www.thetruthaboutcars.com/?p=469478

In September, formerly red-hot sales of Japanese cars in China began to crater after cars were turned over and dealerships torched as fallout of a diplomatic row between Japan and China. Sales were down by about a half in October, and a little less than a third in November. At TTAC, we were skeptical that sales will be back to their old glory in a few months. A high ranking Toyota executive said for the first time that it will take long to recover.

“We have no choice but to believe it is going to be hard to regain the (pre-September) sales pace,” Hiroji Onishi, senior manager in charge of Toyota’s Chinese operations was quoted by Kyodo. “Deducing from past incidents, it would likely take at least one year, and we are making all sorts of adjustments to our plans.”

Onishi gave the grim assessment in a Nov. 26 meeting with union leaders. Toyota hoped to sell a million cars this year in China, the number will probably be closer to 800,000.

This report comes on top of bad news that Toyota expects Japan vehicle sales to fall by a fifth next year, Reuters reports citing an unconfirmed article in Mid-Japan Economist, a Japanese newspaper with good contacts to Toyota in Aichi, The paper says that Toyota decided to set its 2013 domestic sales target for Toyota-brand cars at 1.36 million vehicles, down from its 1.67 million target for this year, in part due to the end of government tax incentives. A Toyota spokesman said no 2013 domestic sales targets have been set.

In 2011, Japanese brands sold a combined total of 2,807,400 passenger cars in China, ahead of German brands with 2,384,700 units, data released by the China Association of Automobile Manufacturers (CAAM) show.

According to Toyota, its production lost due to the tsunami amounted to 150,000 units. The company already took 200,000 units out of its China plans that stretch only as far as March 2013. The island row could affect Japan’s carmakers more than the tsunami.

Sales in China six months down the road will remain below normal levels as a result of the recent territorial dispute,  a slight majority of Japanese manufacturers said in a survey by the Japan Bank for International Cooperation, says The Nikkei [sub].

 

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What Is Happening To Toyota, Honda, Nissan In China, The Same Can Happen To GM http://www.thetruthaboutcars.com/2012/12/what-is-happening-to-toyota-honda-nissan-in-china-can-happen-to-gm/ http://www.thetruthaboutcars.com/2012/12/what-is-happening-to-toyota-honda-nissan-in-china-can-happen-to-gm/#comments Tue, 04 Dec 2012 14:58:39 +0000 http://www.thetruthaboutcars.com/?p=469070

Buried In the depths of General Motor’s quarterly results is a routine litany of negative factors that could severely hamper the company’s future. One of them is “Significant changes in economic, political and market conditions in China.” GM intently monitors what is happening to Japanese brands in China, and it has more reason to watch with worries than with glee. What is happening to Toyota, Honda, and Nissan right now could just as easily happen to GM. The Japanese might shake off the troubles  – Japanese makers have seen worse in the very recent past. GM would be brought to its knees by a boycott of American cars in China. Quite possibly, one of the reasons behind the whole anti-Japanese exercise is to say “look what could happen to you.” Government Motors finds itself at the mercy of China.

Market share by country, passenger vehicles, w/o SUV


Change can comes sudden in China: In the beginning of the year, the most bought cars in China carried Japanese brands. Six weeks after anti-Japanese tensions flared up in China in September over the Senkaku/Diaoyu islands the market share of all Japanese brands in China was decimated to a size a little better than that of France.

Nobody knows how long it will take to get back to normal. Observers are convinced it won’t be next month, and it could take well into next year. As quickly as flames were stoked and extinguished last September, the heat can be turned up again. And is does not have to be just Japan that can be on the receiving end.

Today, all three Japanese majors reported the impact of the anti-Japanese demonstrations and boycotts in November. After cutting sales in half in October, the impact has lessened somewhat in November, but it is still severe. Nissan and Honda lost nearly 30 percent of their sales in November, Toyota gave up 22 percent. The losses are most painful for Nissan, which has the highest exposure to China. Around a quarter of its global sales are in the Middle Kingdom.
We should not feel too comfortable in the thought that Japan and China are arch enemies, and it won’t happen to America.
Those invoking Japanese atrocities during World War II forget that Chinese troops fought against Americans in Korea, and at least by proxy in Vietnam.
Just yesterday, Beijing branded a US-Japan security treaty “a product of the Cold War” after Washington reaffirmed its commitment to Japan. There is plenty else that could trigger outrage in China. The Chinese are fiercely protective of their sovereignty, which sometimes clashes with meddlesome American politics that know now boundaries.

A week ago, Washington complained that China’s currency remains undervalued, but stopped short of branding the country a currency manipulator, an act that could trigger far greater repercussions from China than Japan buying a few rocks in the East China sea to keep them from falling into the hands of a firebrand right-wing Tokyo Governor who could have installed a helicopter base and a troop of Tokyo’s Metropolitan Police on the islets.

It is no accident that the Treasury report on China manipulating its currency or not, originally scheduled for October, was delayed until after the elections.

America has been engaged in a low level trade war with China since President Obama had to express gratitude to the unions for his first term election. GM quickly became collateral damage of this trade war. Tariffs enacted by China to retaliate against America’s punitive tariffs against low cost Chinese tires were carefully crafted to hit GM. Exports of Cadillacs to China dropped as a result, and Chinese production of the brand was accelerated.

General Motors would be the logical and most vulnerable target of anti-American riots in China, should they happen. GM is more dependent on China than any American company, much more so than any Japanese carmaker. Chrysler has zero exposure to China. Ford is just getting into the game.
GM sells more cars in China than in the U.S. In the first nine months of the year, 30 percent of GM’s global sales were in China. Worldwide, Only Volkswagen has similar exposure to the Chinese market as GM, and it has seen visa to executives delayed and parts stuck in customs after Frau Merkel only had tea with the Dalai Lama. Ever since,Germany treads very carefully with China.
In the first nine months of the year, GM’s revenue in China was $24.2 billion, and its net income was $2.3 billion, at least according to the documents filed with the SEC.  In China. GM has a profit margin close to 10 percent, globally, it is around 4 percent. The true profits, generated by licensing, parts sales etc. are most likely higher.
Unlike its Japanese peers, GM is not known for coping well with a crisis. As fragile as GM’s financial house still is, a few cars smashed and dealerships torched in China in front of cameras, amplified by Youku and Weibo in China, Twitter and Youtube worldwide, could decimate GM.
Think it can’t happen, think China and America are tied together like evil Siamese twins? Don’t be so sure. China is Japan’s largest trading partner. Nearly 20 percent of Japanese exports last year were sold to mainland China, compared to 15.3 percent exported to the U.S. Japan is China’s third-largest foreign direct investor and fourth-largest importer.  The anti-Japanese riots did hurt several companies owned by the Chinese Central government. A boycott of GM would hurt only a company owned by Shanghai’s government.

What happened in September in China, and what is still happening to Japanese car sales in China, is a signal to America: See what could happen to you.

And in case nobody is paying attention, there was another signal. During the height of the anti-Japanese riots, a group of protesters marched to the American embassy in Beijing, perfectly timed with the arrival of U.S. Ambassador Gary Locke’s car. The car was pelted with bottles, the American flag was ripped off the car. Watch what happened. Police (blue) was unable or too few to be effective. After some hesitations, paramilitary police (olive) intervened, the Ambassador’s car could speed away. No mass arrests were reported, Chinese authorities expressed regret.

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Chinese Continue To Shun Japanese Cars http://www.thetruthaboutcars.com/2012/12/chinese-continue-to-shun-japanese-cars/ http://www.thetruthaboutcars.com/2012/12/chinese-continue-to-shun-japanese-cars/#comments Mon, 03 Dec 2012 14:02:42 +0000 http://www.thetruthaboutcars.com/?p=468945

Chinese sales of Japanese makes continue to suffer from the fallout of the islands row. Toyota told Reuters that Chinese sales were down 22.1 percent YoY in November. Mazda’s China sales were down 29.7 percent compared to November last year, Reuters says.  The severity of the drops has lessened, but it will be a while until Japanese brands return to their regular growth pattern in China.

Toyota’s China sales were down 44 percent in October, those of Mazda were down 45 percent in the same month.

Sales of other Japanese makers such as Nissan and Honda are expected to follow a similar pattern.

Japanese carmakers have stepped up their marketing activities in China, reimbursed customers for damages caused by violent demonstrations, even offer some kind of a riot warranty that protects the owner from – at least financial – losses. However, the fear is that the image of Japanese brands as a whole has been damaged in China, and that will take much longer to repair than a turned-over car.

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Japanese Car Sales In China Expected To Be Down In November, But Less Than In October http://www.thetruthaboutcars.com/2012/11/japanese-car-sales-in-china-expected-to-be-down-in-november-but-less-than-in-october/ http://www.thetruthaboutcars.com/2012/11/japanese-car-sales-in-china-expected-to-be-down-in-november-but-less-than-in-october/#comments Fri, 23 Nov 2012 13:47:12 +0000 http://www.thetruthaboutcars.com/?p=467756

The boycott of Japan-branded cars by Chinese customers appears to be abating faster than feared by some, but not as fast as hoped by others. Nissan expects its November sales in China to be down by approximately 25 percent, Hideki Kimata, senior general manager of Nissan’s joint venture with Dongfeng, told Reuters. Yesterday, Mazda’s  China chief said he expects sales in China to be down by around 35 percent in November.

Nissan’s China sales were down 41 percent in October. Toyota’s China sales had dropped 44.1 percent year-on-year to about 45,600 units in October. Honda’s China car sales plunged 54 percent in the same month. The market share of Japanese brands in China dropped to 7.6 percent in October from 12.2 percent  in September and 18.6 percent in August.

Nissan sees sales to be near normal levels in China’s southeast, but still very slow in the north and east. Japanese brands traditionally have been strong in the southeast.

Honda said yesterday it will resume normal production in China from the beginning of next month. Toyota plans to introduce 20 new models in China over the next three years, the company said yesterday at the Guangzhou auto show.

However, nobody expects Japanese brands to be back to their former glory immediatley. Kimata said the outlook should become clearer after China’s Lunar New Year holiday in mid-February.

The boycott is expected to affect earnings of most Japanese automakers, and to foil Toyota’s chances of piercing the 10 million unit barrier this year.

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Official Statistics: Chinese Brands Big Winner Of Anti-Japanese Row http://www.thetruthaboutcars.com/2012/11/official-statistics-chinese-brands-big-winner-of-anti-japanese-row/ http://www.thetruthaboutcars.com/2012/11/official-statistics-chinese-brands-big-winner-of-anti-japanese-row/#comments Mon, 12 Nov 2012 19:23:28 +0000 http://www.thetruthaboutcars.com/?p=466650

We have followed the effects of the Chinese boycott of Japanese products with great interest, especially when it came to cars. Encouraged by very strong sales of German brands, we declared them the winner of the war of words. It looks like we may have made a mistake. At least if we can trust official Chinese statistics.

Market share by country, passenger vehicles, w/o SUV

Market Share Passenger Vehicles w/o SUVs
Jul Aug Sept Oct
Japan 21.1% 20.0% 13.2% 9.0%
Germany 25.1% 25.8% 24.1% 27.0%
U.S.A. 16.0% 16.6% 17.1% 17.0%
S-Korea 9.8% 10.3% 10.7% 10.7%
France 3.7% 3.7% 4.6% 4.7%
China 24.3% 23.5% 30.3% 31.3%
Source: CAAM

The China Association of Automobile Manufacturers CAAM publishes monthly sets of data covering the auto business in China.

The chart, based on CAAM numbers, depicts the rapid fall of formerly market-leading Japanese brands to levels just a little bit higher than French brands. As drastic as it is, it is not surprising in light of news that major Japanese automakers  lost nearly half of their sales in China, Cui bono?  According to CAAM data, the market share of Chinese passenger vehicle brands (ex SUVs) jumped from 23.5 percent in August to 30.3 percent in September. We chose to ignore this, because in September, the market share of Chinese brands always jumps, only to resettle later.

In October however, the market share of Chinese brands climbed further to 31.3 percent. That while the market share of all Japanese brands in China careened from 21.1 percent in July to 9 percent in October.

Sure, German brands are up strongly, from 25.1 percent in July to 27 percent in October. However, according to these data, German brands actually saw a slight dip of market share in September. The market shares of U.S., South Korean, and French brands are up moderately.

And now the same exercise for passenger vehicles including SUVs.

Market share by country, passenger vehicles, w/ SUV

Market Share Passenger Vehicles w/ SUVs
Jul Aug Sept Oct
Japan 19.8% 18.6% 12.2% 7.6%
Germany 20.4% 20.8% 19.3% 21.6%
U.S.A. 11.8% 12.3% 12.8% 12.5%
S-Korea 8.7% 9.1% 9.7% 9.7%
France 2.6% 2.7% 3.3% 3.3%
China 36.7% 36.4% 42.7% 45.1%
Source: CAAM

Market observers we asked don’t think it is plausible that Chinese Toyota buyers cross-shop Chery or Geely. But you never know. Maybe, the anti-Japanese fervor translated into a strong pro-Chinese brand sentiment. If this could prove true, it could spell the beginning of the end of the Chinese paradise for foreign brands. We keep an eye on these data and see whether the trend solidifies.

Note:  Chinese domestic brands mostly are independently owned, whereas joint venture  partners of foreign makers usually are  state owned enterprises.

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Nissan Prepares For The Worst In China http://www.thetruthaboutcars.com/2012/11/nissan-prepares-for-the-worst-in-china/ http://www.thetruthaboutcars.com/2012/11/nissan-prepares-for-the-worst-in-china/#comments Tue, 06 Nov 2012 17:00:49 +0000 http://www.thetruthaboutcars.com/?p=466058

All three major Japanese automakers have reported their half year financial results. After Honda last week and Toyota yesterday, Japan’s number two automaker Nissan followed today. The presentations could not have been more different.

After the world had seen Japanese cars upended and dealerships torched in China, and  after Honda had cut its profit forecast for the fiscal year to March by more than a billion dollars due to a drastic drop in China sales, observers expected other Japanese majors to follow suit. Yesterday, Toyota did the opposite and upped its profit forecast for the current fiscal by a few billion yen. Today at Nissan in Yokohama, it was back to the brutal realities.

In the first half, Nissan delivered operating profit of 287 billion yen ($3.61 billion), and a net profit of 178.3 billion yen ($2.25 billion), 2.8 percent lower than in the same period of the previous year.

The full impact of the islands row hit after the books were closed. In its guidance for the full fiscal year that ends on March 31, 2013, Nissan expects a net income of 320 billion yen (US $4 billion). Like Honda, Nissan lopped a full billion off what Nissan COO Toshiyuki Shiga called a “very conservative, worst case scenario” forecast. Along with the financial forecast, Nissan also lowered its projected sales by 270,000 units to slightly over 5 million, 175,000 of those due to China.

Other than Toyota’s presentation, where China received a few passing mentions, Nissan’s conference was all about China. Shiga said the showroom traffic is picking up again and that orders are returning. He has “seen improvements to about 70 percent of normal.” 30 percent less than normal is seen as an improvement over past weeks, where showrooms were near empty.

Nissan’s formerly ambitious growth plans in China definitely have been stunted.  Nissan had been running on an annualized clip of 1.17 million units for China, and had hopes for more. Now, Nissan is trying to maintain last year’s level of a little more than 800,000 units, Shiga says.

Why do the fallouts of the China row hit Nissan and Honda in the solar plexus , while eliciting little more than a la-di-da from Toyota?  Of the three Japanese majors, Toyota has the smallest exposure to China, and where one does not have much, not much can be lost. On the other hand, one cannot shake the impression that Toyota is whistling a bit in the dark.

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Japanese Car Industry Gets Beaten Up In China http://www.thetruthaboutcars.com/2012/11/japanese-car-industry-gets-beaten-up-in-china/ http://www.thetruthaboutcars.com/2012/11/japanese-car-industry-gets-beaten-up-in-china/#comments Fri, 02 Nov 2012 12:43:19 +0000 http://www.thetruthaboutcars.com/?p=465706

Looking back at three catastrophes, the high yen, the tsunami and the Thai flood, a Japanese auto executive said to me last spring: “We’ve gone through hell, and made it. What else would be there, war?” He was close. A war of words over rocks in the East China Sea destroys Japanese car sales in China, while Korea profits.  

  • Honda’s China car sales plunged 54 percent in October from a year earlier, Reuters reports. In September, Honda’s sales fell 41 percent.
  • Nissan sold 64,300 vehicles in China in October, down 41 percent. In September, sales had been down 35 percent
  • Yesterday, Toyota announced that October China sales had dropped 44.1 percent.

At the same time, Hyundai’s China sales climbed 37 percent in October, after a 15 percent rise in September. Reuters comments that Hyundai’s 80,598 units sold in October exceed the 69,715 combined sales total of Honda and Toyota for October.

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The Bleeding Continues: Toyota China Sales Down 44 Percent In October http://www.thetruthaboutcars.com/2012/11/the-bleeding-continues-toyota-china-sales-down-44-percent-in-october/ http://www.thetruthaboutcars.com/2012/11/the-bleeding-continues-toyota-china-sales-down-44-percent-in-october/#comments Thu, 01 Nov 2012 08:57:27 +0000 http://www.thetruthaboutcars.com/?p=465580

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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China’s Boycott Of Japanese Cars Hits Chinese State-Owned Company http://www.thetruthaboutcars.com/2012/10/chinas-boycott-of-japanese-cars-hits-chinese-state-owned-company/ http://www.thetruthaboutcars.com/2012/10/chinas-boycott-of-japanese-cars-hits-chinese-state-owned-company/#comments Tue, 30 Oct 2012 09:06:28 +0000 http://www.thetruthaboutcars.com/?p=465325

A company owned by China’s central government is taking it on the chin as Chinese customers avoid Japan branded cars. Dongfeng reduced production at its joint ventures with Nissan and Honda, the Wall Street Journal reports today. Amount or duration of what the company calls “production adjustments” is unknown.

At the same time, a 35 percent rise in Ford sales helped Ford joint venture partner Chongqing Changan achieve a third-quarter net profit. In September, the Ford Focus was the best-selling car in China.

“The Sino-Japanese tension has affected [demand for] Japanese automobiles, so we are trying our best to regain confidence from our dealers and customers,” Dongfeng said in a statement.

Three weeks ago, TTAC identified Dongfeng and Guangzhou’s GAC (JVs with Toyota, Honda) as among the companies most exposed to the Japanese car boycott.

According to Globaltimes, Nissan said that all their customers whose cars were damaged in recent anti-Japanese protests are entitled to free repairs as well as medical care coverage for personal injuries sustained during the same incidents.

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Honda: China Troubles Will Cost Us $1 Billion http://www.thetruthaboutcars.com/2012/10/honda-china-troubles-will-cost-us-1-billion/ http://www.thetruthaboutcars.com/2012/10/honda-china-troubles-will-cost-us-1-billion/#comments Mon, 29 Oct 2012 04:25:48 +0000 http://www.thetruthaboutcars.com/?p=465229

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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Chinese Boycott Of Japanese Cars Hurts Chinese Companies The Most http://www.thetruthaboutcars.com/2012/10/chinese-boycott-of-japanese-cars-hurts-chinese-companies-the-most/ http://www.thetruthaboutcars.com/2012/10/chinese-boycott-of-japanese-cars-hurts-chinese-companies-the-most/#comments Wed, 24 Oct 2012 14:00:22 +0000 http://www.thetruthaboutcars.com/?p=464815

Sales of Japanese cars in China dropped 40 percent in September as a result of the islands rumpus. The shares of Nissan, Toyota and Honda shares lost about 10 percent of their value. Chinese state-owned enterprises lost much more.

“State-owned Dongfeng Motor Group Co., China’s second-largest automaker by vehicle sales, and sixth-ranked Guangzhou Automobile Group Co. saw their stock prices slide 16 percent since mid-September,” reports The Nikkei [sub]. Why? The Chinese companies are much more dependent on Japanese cars than Japanese carmakers on the Chinese market

As outlined two weeks ago, Dongfeng Motor makes cars in joint ventures with Nissan and Honda. Guangzhou Automobile has joint ventures with Honda and Toyota. Says The Nikkei [sub]: .

“Japanese brands account for 40 percent of Dongfeng’s sales and 90 percent of Guangzhou’s. Some 3.5 million Japanese-brand cars were sold in China last year, giving them a 20 percent market share. Of those, 90 percent were made in China. With a local content ratio of around 90 percent Japanese-brand cars are essentially made in China.”

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Made-Up Stories, Removed Stories: Dirty Tricks Prolong Chinese Islands Conflict http://www.thetruthaboutcars.com/2012/10/made-up-stories-removed-stories-dirty-tricks-prolong-chinese-islands-conflict/ http://www.thetruthaboutcars.com/2012/10/made-up-stories-removed-stories-dirty-tricks-prolong-chinese-islands-conflict/#comments Tue, 23 Oct 2012 12:46:57 +0000 http://www.thetruthaboutcars.com/?p=464685 The violent anti-Japanese demonstrations in China appear to be over, and intestinal complications aside, it seems to be safe again to eat sushi in Beijing or Shanghai. State-owned media however is trying its utmost to keep the matter on the front burner, so to speak, in a very insidious way.

A few days ago, China’s state-owned media wrote that “Toyota has denied media reports that it will withdraw from the Chinese market and shut down production facilities in the country.” Nobody had seen those media reports in the first place, but the denial made headlines the world over.

Writes an outraged Hans Greimel, Tokyo Correspondent of the Automotive News:

“Something is disingenuous about inventing a news angle that had not existed and giving it life through a denial. It’s akin to asking Toyota if it plans to pull out of North America or is working on a car that can fly to Mars.

Just as China was magically engulfed in “spontaneous” anti-Japanese protests that were turned off like a faucet by the Chinese government, you might suspect similar machinations behind local press coverage of the Japanese automakers there.”

As easily as made-up stories stay alive, fact-based accounts of the destruction brought by the riots vanish. Chinese auto portal auto.163.com carried the story of a Toyota car dealer in Qingdao who watched 193 cars and his dealership go up in flames after two safes were stolen. A few days later, the story was gone.

“Perhaps it cut to the bone too much and it was censored or simply removed,” writes Chinacartimes. Ash Sutcliffe of Chinacartimes resurrected and translated the story. Read here in full length how the anti-Japanese riots ruined the life of a Chinese businessman and 28 customers who had their car in for service.

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Toyota Won’t Break 10 Million Barrier This Year http://www.thetruthaboutcars.com/2012/10/toyota-wont-break-10-million-barrier-this-year/ http://www.thetruthaboutcars.com/2012/10/toyota-wont-break-10-million-barrier-this-year/#comments Mon, 22 Oct 2012 18:44:37 +0000 http://www.thetruthaboutcars.com/?p=464521

Cratering China sales due to the islands row made Toyota revise its production targets. Worldwide production by the Toyota Group including Daihatsu and Hino “now looks likely to reach around 9.8 million units to 9.9 million units for the calendar year instead of the currently projected 10.05 million units,” The Nikkei [sub] says.

The number is not official, but the Tokyo wire heard from parts suppliers that Toyota has downgraded its production targets.

In August, Toyota had announced plans for 10.05 million cars for the calendar year, which would have meant a 28% year-on-year jump.

After slashing production in China by half this month, Toyota plans to keep output there roughly 30% lower on average, sources tell the Nikkei. Toyota had planned for China sales of over 1 million units in 2012. Now, it looks like it will be less than 900,000.

“Despite all this, the Toyota group is still on course to break the previous production record of 9.5 million units, set in 2007,” says the Tokyo wire. With the reduced output, GM has an ever so slight chance of keeping its 2011 title as world’s largest automaker.

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China Troubles Cause Toyota Cutbacks http://www.thetruthaboutcars.com/2012/10/china-troubles-cause-toyota-cutbacks/ http://www.thetruthaboutcars.com/2012/10/china-troubles-cause-toyota-cutbacks/#comments Thu, 18 Oct 2012 02:25:40 +0000 http://www.thetruthaboutcars.com/?p=464101

Toyota may be cutting back its global group production by 200,000 units in the 2012 calendar year, writes Reuters, as a reaction to sharply reduced sales in China after the island row. Toyota’s China sales were down 49 percent in September.

The story is based on a report in the Mid-Japan Economist newspaper, which is published near Toyota’s Aichi HQ. The paper confirms what TTAC had said for months, namely that Toyota wanted to produce slightly more than 10 million cars this year. If the report is right, this number would drop to 9.8 million. Even at the reduced level, Toyota would likely regain the top spot, with GM close behind. We will know more about GM when it publishes its Q3 data in a few days.

If the story is correct, then the China protests create bigger damage than thought. The 200,000 unit cutbacks would amount to more than half of the planned China production for the last four months of the year.

Toyota spokeswoman Shino Yamada told Reuters that “the figure cited in the report is not based on anything announced by us, and at this time there are no changes to the figures we presented earlier.”  In August, Toyota had announced plans for 10.05 million cars for the calendar year.  Yamada-san is right, the 300,000 less were not announced.

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Chinese-Japanese Island War Won By Germany http://www.thetruthaboutcars.com/2012/10/chinese-japanese-island-war-won-by-germany/ http://www.thetruthaboutcars.com/2012/10/chinese-japanese-island-war-won-by-germany/#comments Tue, 09 Oct 2012 12:59:45 +0000 http://www.thetruthaboutcars.com/?p=463195

Japanese carmakers and their Chinese joint venture partners lost big-time in the spat over the Diaoyu/Senkaku islands. The winners are German carmakers and their Chinese joint venture partners. Oddly enough, the central government ends up with a shot in the foot.

From Toyota (-48.9 percent), to Honda(-40.5 percent) and Nissan (-35.3 percent), all Japanese automakers reported drastically lower China sales for September, after smashed cars and torched dealerships turned a Japanese car into a sudden liability. (Data via Reuters.)

Islands Row Scoresheet
Losers
Japan Co. China Partner Sept. Sales
Toyota FAW, GAC -48.9%
Suzuki Changan -42.5%
Honda Dongfeng, GAC -40.5%
Nissan Dongfeng -35.3%
Mazda Changan -35.0%
Winners
Japan Co. China Partner Sept. Sales
BMW Brilliance 55.0%
Volkswagen FAW, SAIC 25.0%
Audi FAW 20.5%
Hyundai BAIC 15.0%
Mercedes BAIC 10.0%
GM SAIC 1.7%
Source: Reuters and company data

German brands emerge as the (not for TTAC readers) surprising winner of the war of words over uninhabited rocks. Sales of German branded cars rose between 10 percent in the case of Mercedes and 55 percent in the case of BMW. The biggest winner in terms of volume is Volkswagen. In September 2012, Volkswagen passenger cars sold 40,000 units more in China than in September 2011, Audi added 6,000 units. On a group level, Volkswagen should have increased its September sales by close to 50,000 units, about double its losses in Europe.

GM missed out on a chance to take global market share from its Japanese rivals.

Little contemplated: Each car lost for Japan’s makers is a car lost for a Chinese company. Foreign automakers must have joint ventures with Chinese entities, and most of them are government-owned.

A strange pattern emerges:  On the losing side are mostly central government owned companies: FAW, Changan, and Dongfeng belong to the central government. GAC is owned by the Guangdong province and its capital city of Guangzhou.

On the winning side are (mostly) independent Brilliance, Beijing-owned BAIC, Shanghai-owned SAIC, and FAW. FAW loses on the Toyota side, but wins on the Volkswagen and Audi side, we’ll call that a draw until better numbers come in.

Translation: “Even if China becomes nothing but tombstones, we must exterminate the Japanese; even if we have to destroy our own country, we must take back the Diaoyu Islands.”

With Germany, and especially Volkswagen walking away as the winner, the banner in front of a Chinese Audi dealership that called for the elimination of all Japanese will likely be brought up again.

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Japanese Automakers Cut Chinese Production In Half http://www.thetruthaboutcars.com/2012/10/japanese-automakers-cut-chinese-production-in-half/ http://www.thetruthaboutcars.com/2012/10/japanese-automakers-cut-chinese-production-in-half/#comments Mon, 08 Oct 2012 11:08:29 +0000 http://www.thetruthaboutcars.com/?p=462979 The top three Japanese automakers Toyota, Nissan, and Honda are slashing their production in China in half, says The Nikkei [sub]. The reductions are a response to sales drops triggered by anti-Japanese demonstrations and riots in China.

Chinese factories of Japanese carmakers mostly sat idle for two weeks after closing early before the Golden Week national holidays in the first week of October. Nissan plans to suspend the night shift and operate its Chinese factories only during the day. Toyota and Honda plan to keep Chinese output at around half their usual levels by cutting overtime and slowing production lines.

There were no new demonstrations since September 18, the anniversary of the Japanese invasion of Manchuria. It remains to be seen whether the image of Japanese brands in China sustained lasting damage. Ironically, it is Chinese government-owned enterprises, joint venture partners of Japanese automakers, that take the brunt of the slowdown. Mass layoffs at Guangzhou Auto, Dongfeng and FAW would not contribute to a harmonious society.

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