The Detroit News - Detroit automakers have a chance to claim a larger share of China's auto market as a result of a territorial dispute between Japan and China.
The two Asian nations are jostling over islands in the East China Sea, which Japan nationalized last month but also are claimed by China. The hostility has brought on calls to boycott Japanese goods in China.
IHS Global Insight said sales of Japanese vehicles in China fell 29 percent in September, and that Japanese automakers will lose about a fifth of their market for the rest of this year — a loss of about 200,000 vehicles, compared to 2011. IHS predicts Japanese automakers could lose another 100,000 in China sales in 2013.
Detroit's Big Three — General Motors Co., Ford Motor Co. and Chrysler Group LLC — are among a handful of carmakers that could pick up market share lost from Japanese automakers. GM and Ford had record September sales in China, the world's fastest-growing auto market, due in part to the dispute.
"GM will likely see an immediate increase in sales as Japanese automakers face a tough sell due to the current political dispute between China and Japan," Namrita Chow, a Shanghai-based analyst at IHS Automotive, said in an email.
"GM and (Volkswagen AG) are the best placed to ramp up models in dealerships and push further promotions to win customers who are cash-ready but reluctant to buy Japanese."
If the Japanese did sell 200,000 fewer cars, it would amount to less than 2 percent of overall annual car sales in China and represent a typical one-month sales total at GM and its Chinese joint ventures. But automakers could still profit from the opening.
"It's a significant opportunity for Detroit's automakers, but the Europeans and Koreans as well," said Tim Dunne, director of global automotive operations for J.D. Power and Associates. "If you're talking about an average profit per vehicle is $1,000, you're talking $200 million. That's a substantial amount of money for everybody."
Automakers will likely see better sales numbers at dealerships, but aren't likely to ramp up production or increase imports, because nobody is sure how long this dispute will last, IHS said.
GM, which has sold more than 2 million vehicles in China this year, has no plans to boost production because of the conflict, a spokeswoman said; the increased demand is being spread among many automakers, including the South Koreans.
Ford, which has sold about 428,000 vehicles this year in China, is in a position of growth there. It is spending $5 billion in infrastructure, including five new plants. But Ford is not in a position to immediately increase production or import additional cars.
"At this stage of the game, we're not likely to see a huge rise (in sales), but Ford will continue to benefit," said Jeff Schuster, automotive forecaster at Troy-based LMC Automotive.
Chrysler does not release monthly sales totals, but IHS projections have the Auburn Hills automaker and Fiat SpA, its parent company, selling about 70,000 vehicles in China through September. Chrysler currently has no plants in China. The company would not comment about ways to capitalize there because "nothing has been discussed," a company spokesman said. Chrysler ships vehicles like the Jeep Grand Cherokee to China.
Hyundai Motor Co. has ramped up production in China of its Elantra compact car, and Kia Motor Co. also is strengthening its brand. The Korean carmakers will take some of the sales lost by the Japanese, saidLin Huaibin, IHS Automotive's China light-vehicle sales forecast manager, in a report.
Toyota Motor Corp. and other Japanese automakers halted production last month at joint ventures with Chinese partners because of the friction.
"As this issue is related to a territorial dispute, we do not anticipate an easy recovery," said a note from Citi Investment Research & Analysis. "The impact on Nissan, Toyota, Honda, and Mazda could be considerable."
Detroit automakers last grabbed share from the Japanese after the 2011 earthquake and tsunami. But the slowing Chinese economy leaves automakers hesitant about ramping up production at a time when most already have higher inventory levels.
"It's a serious situation, and typically from my experience in China, it could be tempered very quickly if and when the government wants to step in," Dunne said. "Right now there's a balancing act going on."
