By on December 7, 2012

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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10 Comments on “China Row Could Be Worse Than Tsunami, Effects Could Last More Than A Year...”

  • avatar

    It’s disgusting to see children taught to destroy property and technology rather than aspire to it.

    You don’t get a Honda Soichiro that way.

  • avatar

    This whole thing could be a blessing in disguise for the Japanese. Most likely China will eventually force out/limit foreign car brands to push domestic brands. So if Toyota and others concentrate on the rest of the world now, they will be in a better position in the future when China starts to export cars in direct competition with the Japanese. For the chinese, it is the law of unintended consequences. Just review Detroit’s failed efforts in the past; and how they backfired completely.
    There probably is a certain point/limited market that the communist party has calculated that will allow foreigners to sell in china. And we americans need to go on notice that China will use their power to punish any country that they want to.

    • 0 avatar

      I agree, because the Japanese tend to develop their decisions based on long term planning. They know who they are dealing with and understand the market conditions.

      Quite odd, when you think about Edward Deming`s captivated audience and who ridiculed his ideas.

    • 0 avatar

      It could certainly backfire for China, and not just for selling, but production as well. Stability and cheap labor was a motivating force for companies wishing to move to China (even before there was much of an infrastructure)–from a business standpoint, I imagine this is much more off-putting than what happened in Tiananmen Square.

  • avatar

    I believe most of the foreign companies that built manufacturing plants in the PRC will live to regret it. This is a dictatorship with no respect for the rule of law. I fell for the booming economy and the the 1.5 billion consumers in the 1990s. After numerous cases of IP theft, I wish I’d never sold anything in China.

  • avatar

    Japan should have apologized for their war crimes when it meant something, now that they are weaker than China, no apology will be adequate.

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