Honda's China sales drop 54pc amid Diaoyus row

Honda Motor’s China car sales plunged 54 per cent in October from a year earlier, marking the second monthly sales slump as Japanese automakers continue to suffer the backlash from a territorial dispute between Beijing and Tokyo.

Honda, which earlier this week cut its full-year earning forecast by a fifth, has warned it could be February before business returns to normal in its second-largest market, where consumers are turning to German, Korean and US cars instead.

“People no longer take to the street anymore as they did in mid-September, but they aren’t buying a lot of Japanese cars either,” said Zhang Xin, an industry analyst at Guotai Junan Securities, speaking before the latest figures were released.

“There will be some recovery down the road but it will be very slow.”

Violent protests and calls for boycotts of Japanese products broke out across China in September after Japan nationalized two disputed islands in the East China Sea, known as the Diaoyu in Chinese and the Senkaku in Japanese, by purchasing them from their private owners.

The street protests have since eased by diplomatic tensions continue to fester, with both Japan and China sending patrol ships to waters near the uninhabited islands in recent weeks.

In further evidence that South Korean and some European car makers were benefiting at the cost of their Japanese rivals, Hyundai Motor said its China sales climbed 37 per cent in October from a year earlier.

Honda, which builds cars in partnership with Dongfeng Motor Group and Guangzhou Automobile Group, sold 24,115 cars in China in October, down from 51,826 a year earlier.

The decline had accelerated from September, when sales plunged 41 per cent from the year-ago level. Sales in the first 10 months climbed 2.7 per cent to 494.108, the company said in a brief statement.

Toyota’s China sales were down 44 per cent in October after a 49 per cent fall in September.

Honda said on Monday that its two biggest China plants would continue to run on one shift, rather than two, until at least the middle of next month, with output then gradually picking up ahead of Lunar New Year in February – a traditional buying season.

It has cut its full-year China sales forecast by 17 per cent to 620,000 vehicles, but said it would stick to the plan to invest $880 million to expand capacity at its factories in Guangzhou and Wuhan over the next few years.