In China, Japanese cars and businesses have been torched in a wave of anti-Japanese protest. Caught in the resulting crossfire of nationalistic friction and now suffering collateral damage in the Chinese car market, are the Japanese carmakers.
Honda has now cut its full-year global net profit forecast by 20%, with a 40% drop in September sales in China being largely to blame. Toyota and Nissan have also been hit by the same ill-winds of failed diplomacy. Toyota’s sales in the Chinese market fell 49% in September. Nissan announced this week that it is reducing its full-year net profit by 20%.
Nissan China sales fell by 41% last month and that trend is expected to continue for the foreseeable future. That poses a particular problem for Nissan as China is the company’s single largest market, accounting for 27% of its overall sales.
What is the reason for all this diplomatic tension? Some islands in the South China Sea are to blame. To the Japanese, they are the Senkaku Islands, to the Chinese, the Diaoyu Islands. The islands are in a dangerous three-way stand-off with Japan, China and Taiwan over who owns them. Japan has claimed sovereignty since the 19th century, while China’s claim is rooted in the 14th century.
The beneficiaries of the impasse appear to be Hyundai who are up 15%, GM likewise had a record month last month, while Volkswagen, BMW and Dongfeng-PSA Peugeot Citroen are also racing ahead in the absence of Japanese competition.
