Hyundai and Kia thrive in China as Japanese brands stumble
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SEOUL (Bloomberg) -- Hyundai Motor Co. and affiliate Kia Motors Corp. forecast sales in China will exceed their targets as Korea's two largest carmakers benefit from a wave of anti-Japan protests in the world's largest vehicle market.
The two carmakers will probably sell more vehicles in 2012 than the 1.25 million they had projected, Hyundai said. Combined deliveries rose to 127,827 units last month, or 9.5 percent higher than the previous record set a year earlier, the company said on Sunday.
Non-Japanese brands stand to gain as Chinese consumers shun products from Toyota Motor Corp. to Sony Corp. after a territorial dispute escalated last month, when Japan decided to purchase a group of islands claimed by both countries.
JPMorgan Chase & Co. economists warned last week the political row between Asia's two largest economies will cause Japan's gross domestic product to contract this quarter.
"Although the China sales results are definitely good news for Hyundai and Kia as a whole, the benefits from the anti-Japan movements aren't likely to last long," said Lee Sang Hyun, an analyst at NH Investment & Securities Co. "Also, Japanese automakers that resume production today will try to make up their losses."
Tumbling sales
Nissan Motor Co., which has the highest market share in China among Japanese carmakers, saw September sales fall about 35 percent, while Toyota plans to cut October production 50 percent from a year earlier, the Mainichi newspaper reported Oct. 6, without saying where it got the information.
Mazda Motor Corp. reported Oct. 4 deliveries in the country tumbled 35 percent to the lowest in 19 months, while Mitsubishi Motors Corp. said a day later that Chinese sales plunged 63 percent.
In September, traditionally a major shopping season in China, Hyundai and Kia sales in the country were driven by the Langdong and K2 models, respectively. Deliveries at Hyundai increased 15 percent to 84,188 units, and climbed to 43,639 units from 43,508 units at Kia.
Hyundai's third Chinese plant, which opened earlier this year, may help the company increase production and sell more vehicles in China, though Kia won't be able to expand much further because its plants in the country are already operating at full capacity, NH Investment's Lee said.
Cutting output
Japanese vehicle manufacturers cut output in China in August and officials at the companies said sales and production were poised to deteriorate in September amid the deepening territorial row which has become the worst diplomatic crisis between the two nations since 2005, when thousands of Chinese protested Japanese textbooks that downplayed wartime atrocities.
The dispute escalated when Japan said Sept. 11 that it would purchase the islands, known as Diaoyu in China and Senkaku in Japan, from a private owner.
Nissan expects anti-Japanese sentiment to hit September sales, Executive Vice President Takao Katagiri said on Oct. 5.
The company will weigh the impact of the Chinese protests before deciding whether to revise its sales target there, Katagiri said.
Japan's three largest automakers plan to cut production to half of normal levels in China, the Nikkei newspaper reported on Monday.
Mazda, the first Japanese automaker to report China sales, said on Oct. 4 deliveries in China dropped to 13,258 vehicles, meaning the company didn't even match its sales during the aftermath of last year's tsunami in Japan and floods in Thailand.
Mitsubishi's Chinese sales last month were the lowest since at least April 2011, when the company changed the way it counts China deliveries, spokesman Kai Inada said on Oct. 5.
