Maritime dispute sees Toyota cut production for Chinese market

TOYOTA MOTOR is cutting production of vehicles for the Chinese market in a sign of the deepening economic impact of anti-Japanese demonstrations that swept the country this month.

Like other Japanese companies, Toyota closed factories in China for several days amid the protests. Its factories are now operating again, but in some cases output is lower than it was before the shutdowns, the company said yesterday.

“We are adjusting production on a business-by-business basis, taking into account the present situation with orders and sales,” Toyota said, although it declined to give specific figures.

The carmaker’s decision underscores the risk of lasting fallout for businesses from the maritime dispute between Asia’s two largest economies.

Toyota and other Japanese manufacturers were easy targets for Chinese rage over the purchase by Tokyo of the Senkaku islands – known as the Diaoyu in China – from their private owner.

Attacks on Japanese-made vehicles during the protests were caught on television and are likely to put off Chinese buyers.

Japanese carmakers were already struggling to hold their market share in China. John Zeng, of LMC Automotive in Shanghai, said the share of Japanese carmakers had fallen to 22.8 per cent from 26.6 per cent in 2009. In August, as the Senkaku dispute was gathering steam, German carmakers outsold Japanese groups.

“With the introduction of a large number of high-tech Volkswagen vehicles in China, Japanese compact and mid-sized cars are being attacked by German or even Korean cars,” he said.

Toyota had expected to sell one million vehicles in China this year, or a tenth of its projected worldwide sales. Falling demand in China could affect its production in Japan.

The Nikkei business daily said output at a Lexus plant that makes vehicles for export to China and other markets was being cut by 20 per cent.

Nissan, which depends on China for a higher percentage of sales than Toyota, declined to comment on production levels, but suggested it might make adjustments in coming months.

China is Japan’s biggest trading partner, while Japan is China’s second biggest after the US.

The economic fallout from the dispute in the East China Sea has been felt in other sectors.

Japanese shipping companies have reported unusual delays at Chinese ports, while China’s tourism bureau issued a travel warning for Japan last week.

Japan Airlines said it would cut flights to Beijing and Shanghai in response to tens of thousands of cancellations. – (Copyright 2012 The Financial Times Limited; additional reporting by Yan Zhang)