Bloomberg News

China Auto Prices Seen Extending Declines on Japan Tension

October 16, 2012

China’s passenger-vehicle prices may extend declines through the end of the year as consumers shun Japanese brands after a territorial dispute between the two countries, an official said.

Fourth-quarter prices may fall 1 percent to 1.5 percent from a year earlier, after they dropped 1.53 percent in September, weighed by Japanese brands, Cheng Xiaodong, head of autos at the price-monitoring agency under China’s National Development and Reform Commission, said in a phone interview today.

Japanese brands “will continue to weigh in the coming months,” Cheng said. “There’s big pricing pressure for Japanese-branded cars.”

Consumers avoided buying vehicles made by Toyota Motor Corp. (7203) and Nissan Motor Co. (7201) after rioters torched dealerships and smashed cars in protests over disputed islands in September. That led deliveries of Japanese vehicles to slump 41 percent last month, the state-backed China Association of Automobile Manufacturers said Oct. 10.

Toyota and Nissan’s September deliveries in China fell the most since at least 2008, and Honda Motor Co. (7267)’s sales dropped 41 percent to the fewest vehicles since May 2011.

Toyota will cut China October production in half and idle lines at the Tianjin plant in the week starting Oct.22, Nikkei newspaper reported today. Joichi Tachikawa, a Tokyo-based spokesman, reiterated company comments that Toyota is adjusting Chinese production based on demand.

At Nissan, which sells more vehicles in China than Toyota or Honda, the situation is “improving day by day” and the company is adjusting production levels according to demand, Executive Vice President Hiroto Saikawa, who oversees Asia including China, said yesterday in Yokohama.

Saikawa said he expected sales to return to normal levels in two months. Honda President Takanobu Ito said in an interview last week that it’s unlikely for the current political tension to last for longer than six months.

Cheng didn’t share the same optimism. He said it will take more than six months for sales of Japanese vehicles to recover to pre-protest levels, unless tensions flare up again.

To contact Bloomberg News staff for this story: Ma Jie in Tokyo at jma124@bloomberg.net; Tian Ying in Beijing at ytian@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net


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