Ford gears up as Japan car sales in China stall

A heated row over some rocks in the East China Sea has put Japanese car making in China in reverse.

Chinese vehicle production from Toyota and other major manufacturers in Japan tumbled last month as a territorial dispute between the two Asian powers led to boycotts of Japanese products in China.

Toyota said yesterday its Chinese output plunged 61 per cent to 30,591 vehicles, its third straight monthly decline.

"We have adjusted the production to meet the current level of demand in China," said Dion Corbett, a spokesman for Toyota. He declined to comment further on the reason.

Chinese output of Nissan sank 44 per cent to 61,360 vehicles, while production from Honda declined 54 per cent to 26,302 vehicles, the companies said.

Sales of Japanese cars have plunged in China since the Japanese government in September nationalised a cluster of tiny, uninhabited islands in the East China Sea called Senkaku in Japan and Diaoyu in China that are controlled by Tokyo but also claimed by Beijing.

The purchase set off violent demonstrations in China and a call to boycott Japanese goods. Toyota and Honda dealerships were burned down in one city and crowds shouting anti-Japanese slogans have gathered and smashed Japanese cars. Toyota's total overseas production rose 12.9 per cent last month from a year ago to 430,041 vehicles.

Its global output during the month dipped 0.3 per cent to 695,083 vehicles. Including subsidiaries Daihatsu, which makes mostly small cars, and the lorry maker Hino Motors, global production slipped to 787,476, the company said.

Nissan's global output last month declined 4.8 per cent to 410,961 vehicles.

Honda's worldwide production during the month rose 9.4 per cent to 346,129 vehicles.

Some non-Japanese car makers are benefiting from Toyota, Nissan and Honda's woes.

Ford is to focus its expansion efforts, the largest in more than half a century, on Asia amid fears of slow growth in the United States for years to come and a wallowing Europe.

"We have massive investments going on globally and really at an unprecedented rate for us. We have very ambitious growth plans built on global products. Our plan is very aggressive and a lot of it is based here in Asia," Bill Ford, the executive chairman of Ford, said yesterday.

"I think that we're doing very well in China. Our share is up and our sales are up but one needs to be cautious. These things ebb and flow," said Mr Ford. "There's no question there's been an effect [from the boycott] but we're not really building our business on that."

Thailand will be one of the foundations of Ford's business in Asia, with the company intending to use it as a regional export hub for the rest of the Association of South East Asian Nations (Asean).

More than 90 per cent of Ford's production for the 10 countries of Asean is in Thailand, where vehicle manufacturing capacity is 445,000 units per year.

"We have big plans for Thailand and we have big plans for the region," said Mr Ford.

Those plans involve the construction of nine new plants. In China, the company recently started operating a new plant in Chongqing. Five factories in China and two in India are currently under construction. When these plants are completed, Ford's production capacity in the region will double to 2.9 million vehicles per year by mid-decade.

Floods in Thailand last year were a key contributor to a US$83m (Dh304.8m) loss for Ford's Asia-Pacific region in the fourth quarter of last year but did little to dampen expansion plans. Ford's second plant there, costing US$450 million, opened in Rayong in May. The firm's production capacity in the region will double to 2.9 million vehicles per year by mid-decade.

"This region is where the action is and that's going to be true off into the future," Mr Ford said.

* compiled from Reuters and AP