After a sharp fall in sales in China, there are indications that
the worst may be over for Japanese auto makers as the impact of a
territorial dispute between the countries begins to wane.
Still, analysts say that daunting problems remain for Japanese
auto companies who are also grappling with fierce competition and
struggling to keep up with rapidly shifting consumer preferences in
the world's largest car market.
Nissan Motor Co. (NSANY, 7201.TO) said Monday its new car sales
in China rose 2.7% on year in April, reversing a 17% fall in March.
A decline in Toyota Motor Corp.'s (TM, 7203.TO) China sales slowed
to 6.5% in the same month from 12%. Mazda Motor Corp. (7261.TO)
said Friday it posted a 15% fall in China sales in April, compared
to a 25% plunge in March. Honda Motor Co. (HMC, 7267.TO) will
release its April figures Tuesday, a spokeswoman for the company
said.
China sales of Japanese car makers have been hammered amid a
flare-up in a long-running dispute over a group of uninhabited
islands called Diayu in China and Senkaku in Japan. In one incident
in the city of Xian, a Chinese man was pulled from his Toyota and
violently beaten in front of his family by anti-Japanese
demonstrators last September.
Japanese brands' share of the Chinese passenger-vehicle market
grew to 15.03% in March from 12.54% in February. As recently as
last July their share was 20%.
"We are satisfied with the result, which is in line with our
plan," said Du Fan, a spokesman for Nissan's China operations. He
expected "the upward trend would remain in the following months,"
on the back of recent model launches such as the Teana sedan and
the Livina compact.
In addition to introducing new models, which Japanese car
companies say are now more attuned to the needs of the modern
Chinese driver, brands such as Nissan, Toyota and Honda are all
taking steps to offer improved warranties. They are also trying to
boost consumer confidence by offering guarantees against losses in
case cars are damaged in future anti-Japanese disturbances.
Nissan has introduced a scheme that guarantees a replacement car
in the event that a defect is discovered within seven days.
Nissan is also revamping its dealer incentive programs, while
most say they are expanding geographically to tap the growing
markets in China's heartland.
However, a complete recovery in sales volumes could be still
months away. "They are still in the process of recovery, which
could last until the end of June," said Jinghui Wu, a director at
consultancy AlixPartners.
Credit Suisse said in a note last week that the impact of the
island dispute on Japanese car makers in China was longer than
expected.
But Japanese car makers face a raft of other problems, including
increased competition from U.S., European and South Korean car
makers.
General Motors Co. (GM) said Monday it and its joint ventures in
China sold 15% more cars in April compared with the same month last
year.
Some Chinese car buyers say they are not convinced Japanese
brands can satisfy their needs. First-time buyer Hua Chao Hui said
he did not intend to buy a Japanese brand when interviewed at auto
mall in Guangzhou last month.
"It's not for political reasons," the 32-year-old software
engineer said in a reference to the recent tensions. "I hear there
are some quality issues with Japanese cars," he said.
AlixPartners' Ms. Wu said compared to the political fallout from
the territorial dispute, she's more concerned about Japanese car
makers' business strategy in China.
"In recent years, there have been tremendous changes in China's
auto market," she said, citing a growing number of younger drivers
who seek brightly colored cars that are dynamic in appearance or
sport-utility-vehicles. But compared to U.S. and German companies,"
Japanese car makers have moved slowly to cater local demand, Ms. Wu
said.
Write to Rose Yu at Rose.Yu@wsj.com and Colum Murphy at
Colum.Murphy@wsj.com
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