Shrinking share

The surveys are borne out in purchases figures - the market share of Japanese cars dropped from 26.6 percent in 2009 to 22.8 percent currently.

But politics and geologic events aside, the real reason for the drop in market share is the decreasing competitiveness of Japanese cars coupled with slow adjustments in strategy.

Japanese compact and mid-sized cars are losing ground in the face of competition from German, American and Korean cars.

Volkswagen has introduced a large number of high-tech models in China.

General Motor has focused on development and use of small turbocharged engines.

Ford will equip its next-generation Fiesta with a 6-speed Powershift gearbox.

In contrast, Japanese cars are not offering new technologies that will attract customers.

In the luxury car market, Lexus has registered solid growth, but its hesitation in localization has cost it in the competition with highly localized German luxury cars.

There are six major Japanese automobile manufacturers in China - Nissan, Toyota, Honda, Mazda, Suzuki and Mitsubishi.

The top three of Nissan, Toyota, Honda planned on double-digit sales growth this year, but operational difficulties caused by Sino-Japanese tension will make it nearly impossible for them to achieve their targets.

The situation is much more difficult for Mazda, Suzuki and Mitsubishi.

Mazda sales decreased 6 percent in August, with its joint ventures FAW Mazda and Chang'an Mazda decreasing 11 percent and 17 percent respectively.

Although Mazda has declared that it will devote a lot more effort to promoting sales, the automobile community still has doubts whether the measures will invigorate the brand in China since the number of its distributors is decreasing.

As well, the Diaoyu Islands conflict has thwarted promotional plans by Mazda for the foreseeable future.

Mazda, Suzuki and Mitsubishi are not in themselves very strong brands. Their long-unsolved problems in joint ventures limits their growth.

The Japanese car industry is confronted by troubles from home and abroad. It faces not only fierce competition from US and European carmakers, but also growth in Korean brands in the small and medium-sized car segments.

The writer is the director of Asia Pacific Forecasting at LMC Automotive. He can be contacted at jzeng@lmc-auto.com