Summary: Japanese enterprises' changing market share in the Chinese passenger automobile market

Gasgoo.com (Shanghai) - Over the last few years, Japanese manufacturers have seen their combined share in the Chinese passenger automobile market gradually fall. This decline reached a record point following the territorial disputes between China and Japan over the Diaoyu Islands this autumn, which instigated several protests calling for a boycott of Japanese products in the country.

According to statistics collected by Gasgoo.com (Chinese), Japanese manufacturers' Chinese passenger automobile market share reached its peak of 30.2 percent in 2008, when their combined sales totaled 1.69 million units. From then on, although their overall sales grew, Japanese manufacturers saw their combined market share gradually slip, with the figure for the first three quarters of this year reported to be just 21.1 percent.

A key factor behind the decline in market share is the fact that Japanese manufacturers missed a huge business opportunity when the Chinese automobile market experienced unprecedented growth in 2009 and 2010. In those two years, several foreign manufacturers, including General Motors and Volkswagen, were able to reap substantial profits from the country. However, Japanese enterprises excessively conservative mindset and market strategy prevented them from taking the risks necessary to capitalize on the extraordinary levels of consumer demand. This factor, coupled with frequent recalls affecting their vehicles worldwide, is part of the reason Japanese manufacturers' Chinese operations are in the state they are today. In the end, sales of Japanese passenger automobiles increased 27.8 percent in 2009 and 22.7 percent in 2010, well below average industry sales growth rates of 49.8 percent and 34.5 percent.

Then, in 2011, growth rates in the Chinese automobile industry began to slow down. In that year, Japanese manufacturers suffered a massive setback due to the earthquake and resulting tsunami that Japan suffered early in the year. Their total sales in China totaled 2.77 million units that year, while their combined market share fell to 22.7 percent.

The major obstacle that the manufacturers have had to face this year is the Diaoyu Islands dispute between Japan and China. Following news that Japan will be nationalizing the islands, protests have flared up across China advocating the boycott of Japanese goods. Looking at September's results alone, Japanese manufacturers' sales results fell a full 41.3 percent. Their combined market share reached a record low of 13.9 percent during the month.

In addition to external factors, Japanese manufacturers' progress in the country has been hindered due to the slow speed with which they update their models. In the past, Japanese vehicles were praised for their low fuel consumption rates and reliability. However, new models introduced by Western rivals such as GM and VW have come close to matching or even surpassing standards set by Japanese vehicles.

With the Diaoyu Island dispute still unresolved and the introduction of new models from their competitors, it remains to be seen whether or not Japanese manufacturers can make a recovery in the last few months of the year.