Nissan outpaces Toyota, Honda by sales in China

Nissan Motor Co., Ltd. sold 756,000 vehicles under the brands of Nissan and Infiniti in the Chinese market in 2009, jumping 39% from a year earlier.

By last December, the company had ranked number one among Japanese carmakers in terms of sales in China, overtaking archrival Toyota Motor Corporation.

In the meantime, Toyota's sales rose 21% to 709,000 vehicles in China. That of Honda Motor Co., Ltd. hiked 22.5% to 576,000 vehicles. Besides sales, Toyota and Honda were both behind Nissan in terms of overall growth.

In the year, the overall performance of Japanese carmakers was behind their peers from the US, European, and South Korean. General Motors Corporation sold 1.8264 million vehicles, surging 66.9%, taking the first place among foreign carmakers in terms of sales.

Shanghai Volkswagen Automotive Co., Ltd. (SVW) and FAW-VW Automobile Co., Ltd. together obtained sales of 1.4 million vehicles, leaping 36.7%. Hyundai Kia Automotive Group sold 811,700 vehicles, outpacing Toyota.

Notably, foreign carmakers are divided into two groups in the Chinese market: Toyota, Volkswagen, and Honda have two joint ventures, while General Motors, Nissan, and Ford Motor Company (NYSE: F) each has only one partner. General Motors and Nissan were ahead of Toyota, Volkswagen, and Honda in terms of either sales or overall growth last year.

For example, Dongfeng Nissan Passenger Vehicle Company started operation in 2003, five years later than the ventures of Toyota and Honda. Its sales outlets are fewer than those of the latter. However, its performance is much better.

Because all of Nissan's car models are sold in the sales outlets of Dongfeng Nissan, customers have better acknowledgement of Nissan as a Japanese brand. Meanwhile, investors of Dongfeng Nissan's sales outlets get more stable sales and profits.

Toyota, Volkswagen, and Honda are able to rapidly boost their sales through more ventures. However, different shareholders usually diverge over medium- and long-term development plans, pointed out ATKearney.

The company that set up two ventures need to balance interests among partners, and it is difficult to maintain a long-term good relationship with all of them, in the opinion of Kevin E. Wale, president of GM China Group.

Even so, many foreign carmakers choose to set up two ventures in China. Besides Toyota, Volkswagen, and Honda, PSA Peugeot Citroen and Hyundai have also been seeking their second partners.

Toyota, Volkswagen, and Honda have more say when negotiating with its partners and burden less risks, believed Stephen W. Dyer, managing director of ATKearney.