Toyota Sales Rise 41% in China as Japan Brands Extend Recovery

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Toyota Motor Corp. (7203)’s China sales
surged in the first month since a territorial dispute between
Asia’s two biggest economies resurfaced, showing Japanese brands
are escaping the type of consumer backlash they faced last year
over a group of uninhabited islands.

Deliveries to China rose 41 percent to 89,800 vehicles in
November, raising the 11-month total to 809,000 units, according
to a statement from the Toyota City, Japan-based company
yesterday. That means that the maker of the Camry will post
record sales in the world’s biggest auto market this year unless
they plunge 18 percent this month.

Sales rose for a third month to the highest level in 2013,
illustrating the contrast in the economic fallout between last
year’s diplomatic row and this year between the two countries.
China created an air-defense area covering the islands last
month, reviving memories of last year and underscoring how
Japanese companies remain vulnerable to periodic bouts of
tensions between the two Asian neighbors.

“The pressure on Japanese automakers will always be
there,” said Harry Chen, a Shenzhen-based analyst with Guotai
Junan Securities Co. “They need to find the best way to cope
with it given that China is a must-have market for them.”

China has sent fighter planes into the self-declared zone
after announcing its creation on Nov. 23 and said its military
will take “defensive emergency measures” if aircraft enter the
area without reporting flight plans or otherwise identifying
themselves.

Military Flights

The State Department on Nov. 29 urged U.S. airlines to
notify Chinese authorities before flying through the defense
zone, even as the American military conducts daily flights in
the area without such notification. Japan has told its airlines
to stop providing flight plans to China.

Last year, the dispute flared after the Japanese government
decided to purchase the islands from their private owner,
triggering protests across China, with some demonstrators
torching dealerships and vandalizing cars associated with Japan.
Toyota and Nissan Motor Co. (7201) posted their first annual sales
declines in China following the riots.

Nissan, which sells more cars in China than any Japanese
automaker, has fully recovered from the anti-Japan consumer
backlash, Ren Yong, vice president of Dongfeng Motor Co. said on
Nov. 21 at the Guangzhou auto show.

Toyota’s luxury Lexus division is seeing “steady, good
growth” in China and will post record sales in the country this
year, Mark Templin, an executive vice president, said last
month.

To contact Bloomberg News staff for this story:
Tian Ying in Beijing at
ytian@bloomberg.net

To contact the editor responsible for this story:
Young-Sam Cho at
ycho2@bloomberg.net

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