Japanese carmakers reducing output in China over continued protests

Article by Anita Panait, on September 27, 2012

Japanese carmakers, including Toyota Motor Corp. and Nissan Motor Co., are slashing their output in China as anti-Japan protests continued to affect dealerships and dampened their sales forecasts in the Asian country, which is currently considered as the world’s largest auto market. It is typical for the members of the auto industry to slow down production in mature markets like the United States and Japan in order to maintain a certain inventory level and to avoid offering deep discounts that could affect profitability.

The latest moves of Japanese carmakers to cut their Chinese production, however, is considered as peculiar in a market that has contributed much to the global growth of the auto industry for the past decade. It should also be noted that most carmakers had been adding capacity in China until the market experienced some slowdown this year.

The economic slowdown in China has forced the car supply to overtake demand, resulting in higher inventory levels in many car dealers in the country. Koji Endo, auto analyst at Advanced Research Japan, remarked that for the time being, sales of Japanese carmakers in China will be down by 20 to 30 percent. Endo noted that during the previous protests, which occurred in 2010, the effects only lasted about a month.

He quipped that the current protest would have a “serious impact.” Nissan, the largest Japanese carmaker in China, announced it would stop production at a Chinese joint venture starting Thursday. The stoppage would last through next week's national holiday period. Toyota, meanwhile, is suspending production at its Tianjin and Guangzhou plant through the holiday, according to spokeswoman Shino Yamada. Both production stoppages were started a few days earlier than planned.

Topics: japan, china

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