China and Japan’s diplomatic spat in September looked like it was leading towards actual war at one point, both parties eventually backed down but in China where street protests turned violent, Japanese branded cars, stores and restaurants bore the brunt of an angry youth. Chinese car buyers backed off Japanese car brands in September for a number of reasons, but the key factor likely being they were afraid of any future damage made to their Japanese car purchases. The fall out is continuing into October and is likely to bloody the nose of the four key Japanese brands at the end of the year when they tally their sales against their actual sales goal. In September sales were down roughly 40%, in October its a similar state:

Toyota’s goal for the Chinese market in 2012 was 1 million units, a 13% increase over 2011′s sales results. Toyota China’s PR dept has already released a statement saying that it will be difficult for Toyota to reach its goals in the current climate. Nissan is Japan’s top brand in China with a sales goal of 1.35 million units for 2012 alone, in the first ten months of 2012 they racked up sales of 1.01 million (a decrease of 0.01% over the first ten months in 2011) units and have to clear strong sales in November and December if they are to reach their sales goal, but according to Chinese media reports Nissan have not yet been told to modify their sales goal.

Several questions arise from this situation, is this a temporary scenario or will it be a long term trend for Japanese car brands in China? We personally think it will be short term issue, Chinese protests have always eventually blown over and relations returned to ‘business as usual’ within a few weeks but September’s protests were by far the biggest and most violent to date which could indicate that Chinese will stay away from Japanese brands for the long term. Secondly, who is benefiting from this down turn? Could it be the Chinese? Last month saw Chinese brands rise in popularity for a short period, in August 2012 Beijing Hyundai sold 63,372 vehicles September Beijing Hyundai was the second best selling brand in the Chinese market after VW with 66,632 cars sold, so only a slight rise there. Kia sold 25，760 cars in August and 32,016 in September. We will have to wait until Octobers sales figure release on the 10th October before we can see a complete trend.