Japanese automakers face tough times in China

Japanese automakers are facing tough times in China, as ongoing territorial tensions between the two countries are hurting their sales.

"The serious impact we are seeing is far beyond our expectations," said Luo Lei, deputy secretary-general of the China Automobile Dealers Association.

"It will be impossible for struggling Japanese automakers to achieve their full-year sales targets," Luo said.

Protests against Japan over the "nationalization" of the Diaoyu Islands broke out across China over the weekend in what observers described as the largest demonstrations against Japan since 1972. Experts said the protests could continue for days.

Luo added that the current situation might have the "most serious" impact seen so far on well-established Japanese car brands in China, and could be even worse than the lackluster market performance seen in the first half after the earthquake and tsunami that hit Japan last year, and from which the Japanese car companies had just managed to recover.

Though the improved sales performance in the first half allowed Nissan and Toyota to increase their previous sales targets for 2012 by 20 percent, "the demonstrations, with people showing their rage against Japan-made products, will keep Chinese consumers far away from the showrooms of Japanese brands," Luo said.

He also suggested that Japanese automakers should close the doors of their 4S stores - centers which provide sales and repair services - for a few days, to avoid unnecessary losses from possible damage caused by the protests.

"However, China's overall car market will only be influenced to a limited extent, as Chinese consumers have always shown low brand loyalty. Due to safety considerations, they will change their focus to German or US cars," said Luo. "This will add pressure on Japanese automakers, which are trying to resume their leadership of the Chinese market in the near future."

In August, German automakers for the first time outpaced their Japanese rivals to take the lead in the Chinese passenger car market, according to data from the China Association of Automobile Manufacturers.