Car-makers see sales cut in half amid islands row

Sales of Japanese vehicles plummeted in China during September as anti-Japanese sentiment flared over a territorial dispute that threatens to hobble what was a booming business ­relationship between Japan and its biggest export market.

Toyota said sales of its new ­vehicles in China dropped 48.9 per cent in September from a year before to 44,100 vehicles. Honda said September sales fell 40.5 per cent to 33,931 vehicles. China sales for Nissan also slid 35.3 per cent last month to 76,100.

The sales plunge comes after Japan last month claimed a group of tiny islands in the East China Sea, called Senkaku in Japan and Diaoyu in China, which had already been controlled by Tokyo but were also claimed by Beijing.

The move set off violent protests in China, and a widespread call to boycott Japanese goods. Toyota and Honda dealerships were burned down in one city, and crowds shouting anti-Japanese slogans have smashed up Japanese cars.

Although the flare-ups have calmed in recent weeks, it would still require courage to be seen in a Japanese car in some Chinese cities. Japanese manufacturers temporarily closed some of their Chinese factories. Production is back up this week – but reduced to lower levels as demand has collapsed.

Last week, Mitsubishi reported that China sales fell 63 per cent to 2,340 vehicles in September. Mazda said its sales in China sank 36 per cent to 13,258 vehicles for the month.

Combined, the aftermath of the territorial spat with China will shave 0.8 per cent off Japan’s output growth for the fourth quarter, sending Japan’s economy slightly downward, instead of flat-lining, said financial services firm JP Morgan.