The Diaoyu Islands are a group of uninhabited islands located roughly due east of mainland China, northeast of Taiwan, west of Okinawa Island, and north of the southwestern end of the Ryukyu Islands. They are currently controlled by Japan, which calls them Senkaku Islands. Both China and Taiwan claim sovereignty over the islands.
Japanese carmakers' sales suffer damage from islands dispute
It seemed like the wait would be endless for Zhan Junjie, a Toyota salesman at a dealership in Pudong, Shanghai.
Finally, for the first time that day, a customer ambled in. After a brief chat, the salesman gave him a catalogue of Toyota's blockbuster Camry model, before elaborating on the cars' performance and price.
After the conversation ended, he gave him his business card and asked for his mobile phone number, promising to text him any information if ever there was a promotion. But no sale was made.
Within days, Zhan's dealership began offering discounts of up to 30,000 yuan for a 250,000 yuan Camry with a 2.5-litre engine - 12 per cent off. But even that failed to boost sales.
Toyota, the world's largest car maker, has already decided to slash production at its Chinese plants as sales tumble as a result of anti-Japanese protests.
"I don't know what effect the Diaoyu islands dispute will have on Japanese car sales. But Toyota's plan to cut its output by half on the mainland appears to be proportionate to the sales decline at our showroom," Zhan says.
"If buyers don't show up, I can't do much more to promote the cars. Camry is a reputable model and well received by Chinese drivers but it's obvious that many people are worried about owning one after Japanese cars got smashed during the demonstrations."
Zhan jumped ship from a Suzuki dealership eight months ago to Toyota, believing that it would be easier to sell Toyota cars. "I need to carefully think about my next move should this continue in the months ahead," he said.
Japanese carmakers have taken a severe beating from the row between Japan and China over the East China Sea islands, known to the Japanese as the Senkaku Islands.
Japan's Mazda said yesterday that its sales last month, with about 9,500 cars sold, were down 45 per cent from 2011. It was even worse than the 35 per cent year-on-year fall in September.
Meanwhile, Toyota sold 44,100 units in China in September, down 49 per cent from a year ago and 44 per cent in October. According to Bloomberg, a report by researchers at Toyota, which put all Japanese carmakers' current output in China at 40 per cent below normal, showed they were not expecting the company's output in China to be fully restored until July next year.
The figures come after a statement by Japan's Honda last week that sales may not return to normal in China, the world's biggest car market, until the Lunar New Year.
It lowered its sales forecast in China by 17 per cent after it sales were more than halved last month, following a 40.5 per cent fall in September to 33,931 units.
While mainlanders have abandoned plans to buy Japanese cars, homegrown brands such as Geely and Korean rivals enjoyed a windfall. Geely's sales in September jumped 33 per cent from a year ago to 43,055 units.