Boycott of Japanese cars by Chinese buyers over the controversy regarding ownership of oil rich Senkaku (Diaoyu) islands may hurt domestic engineering firms and dealerships of Japanese car manufacturers in China.
Japanese auto manufacturers like Toyota, Mazda, Nissan, Honda and Mitsubishi have been the worst hit due to the switching over. Sales of these companies took a blow of about 35-50% in the month of September, 2012.
It is important to know here that the Japanese car manufacturers that we have talked about above have its parts manufactured in China and assembled there also. Once the cars have been manufactured, they are dispatched to the dealerships within China owned by Chinese where Chinese sales staff themselves sells these cars.
Janet Lewis who works as analyst at the Macquarie Capital Securities in Hong Kong has said, “In many ways, reduced sales of Japanese brand vehicles in China actually hurts Chinese companies,” She also said, “There is a definite impact in China.”
It may difficult to quantify the exact impact of the boycott on these dealerships until the next quarterly financial statements are out. Till then all you can do is speculate the decline in sales happening in China to the overall sales figures of its auto manufacturers reported by Japan.
John Zheng, Director of Auto Industry consultant, LMC Automotive based in Shanghai has made his point saying that it’s going to be the dealerships that are going to face majority of the heat of this boycott.
He said, “Dealerships have already suffered a lot in the big cities,” and “In many cases, they’ve already paid for the cars on their lots. If they are unable to sell them, that’s out of their pocket, not Toyota’s or Honda’s.”
The reason why these cars have been targeted by the protestors is cause of their understanding in the public as the dominant category in overall Chinese exports that take place each year. Another incident took place in industrial city of Xi’an where a man was beaten and then dragged by a Japanese car leaving him paralyzed.
Though protests have stopped since the incident took place but the sale of Japanese cars had not picked up since then and still continues to be a cause of concern. However some experts are also of the view that nationalist sentiments may be playing strong on people’s psyche in China. Another critical sentiment going strong is that of destruction of property of people who will buy these cars against mass decision.
Source: CNN Money
Photos: AFP/ Getty Images