Opinion | Cars: Japan's long winter, BYD sputters
Japanese car brands and BYD are both on the cusps of prolonged winters, as the former group battles negative consumer sentiment and the latter deals with declining businesses.
Both of these stories aren't really new, as Japanese car makers have seen their sales drop sharply since a territorial dispute over a small island chain first flared between Beijing and Tokyo in September. Meantime, BYD's woes date back even earlier, as the company's sales have been plunging for much of the last two years due to weakness plaguing its car business. In an alarming sign, it looks like that weakness is also starting to infect BYD's older and more stable battery unit as well.
What's most interesting to me in this latest gloomy report is the prediction that sales may not return to normal until February, as that indicates the Japanese automakers are expecting the current downturn to last longer than many people had expected. In fact, I think even February could be an optimistic prediction and the downturn could last well into the middle of next year, dealing a big blow to both the Japanese brands and their Chinese partners.
Many Chinese may soon resume buying most Japanese products at more normal levels by the end of the year as negative sentiment from this diplomatic crisis starts to fade. But cars are likely to suffer for a longer period due to the lingering images many Chinese consumers have of Japanese brand cars being burned and their owners beaten by angry crowds. Such fears are likely to linger for a while, as many consumers could easily opt to buy a US or European brand car over a Japanese one due to fears that they or their car could become a victim of angry mobs if tensions ever flare again.