Lunar holiday shift lifts Japanese car sales in China

Major Japanese car makers reported double-digit gains in January sales in China, the first year-on-year growth in five months, with a boost from a calendar shift as well as the waning impact of a territorial dispute between Beijing and Tokyo.

On Monday, Nissan Motor Co. 7201.TO 4.28% said its sales in China last month

were up 22% from a year earlier, to 115,700 vehicles, and Honda Motor Co. 7267.TO 1.00% said its sales through its two joint ventures also were up 22%, to 47,248 vehicles.

Analysts said the increase was largely due to absence of the Lunar New Year holiday, which fell in January last year but lands in February this year. Sales of autos in China typically slow dramatically during the weeklong holiday.

"Japanese car makers have been winning back Chinese consumers thanks to their efforts and given that quarrels between the two countries have subsided ahead of the Lunar New Year holiday, but it is too early to be optimistic about their China sales this year," said Zhang Xin, an analyst at Guotai Junan Securities.

Analysts widely expect Chinese sales to rise between 20% and 30% over a year earlier for the group for January. The semiofficial China Association of Automobile Manufacturers trade group is due to release January sales data later this week.

The Japanese government in August said it would purchase a group of disputed islands in the East China Sea. The disclosure prompted anti-Japanese protests across China and sharp declines in purchases of Japanese products from cars to cameras.

Japanese companies' share of the Chinese car market was 16.4% in December, down from 19.4% a year earlier, data from CAAM show.

In a bid to regain its leading position in the world's largest auto market, Japanese auto makers have taken a series of measures in recent months, including offering larger discounts and compensation for owners whose cars were damaged during protests.

Such efforts seem to have had an impact, as recent data points to a bottoming out of the sales slump. For example, sales at Nissan, the top-selling Japanese car company in China, were down 24% in December from a year earlier, compared with a 30% decline in November and a 41% drop in October. Toyota and Honda reported similar improvement.

Still, analysts said it is difficult to predict when Japanese car makers' sales here will again return to the about 20% share they held before the long-simmering dispute boiled over, as there are no signs that Beijing and Tokyo are closer to a resolution.

"The disputes over the Diaoyu islands will be a long-term overhang to Japanese car makers," said Guotai's Mr. Zhang, referring to the uninhabited islands in East China Sea that are called Senkaku in Japan.