TOKYO Toyota Motor Corp (7203.T) and Nissan Motor Co Ltd (7201.T) are curtailing production in China following the worst anti-Japan protests in decades, company officials and media reported on Wednesday, putting Toyota's 1 million-unit China sales target at risk.
Lingering resentment in China may hurt demand for Japanese cars, consumer electronics and other goods at a time when slowing growth in Asia's biggest economy in the wake of Europe's debt crisis may weigh on overall consumer spending.
China's economy grew at its slowest pace in more than three years in the second quarter. A factory survey in August showed China's manufacturing sector contracted at its sharpest pace in nine months.
Reports of the auto closure details varied, but the Asahi newspaper said Toyota will completely halt China production in October and stop all exports to China from Japan.
Separately, the Nikkei business daily said Toyota plans to add four days to a planned eight-day holiday closure at its mainstay plant in Guangdong Province, which builds 30,000 cars a month, beginning on Wednesday and will operate only one shift instead of two when it reopens in October.
A Toyota spokeswoman said she could not comment on the report but said the company would issue a statement later.
For its part, Nissan told Reuters it plans to halt production at a joint venture in China starting on Thursday, three days earlier than planned, and extending through next week's national holiday period.
"The fact that these guys have a nice excuse to cut down production in China where they are running what could be argued as being slightly excessive inventory levels is good news to the companies," a senior trader at a foreign brokerage in Tokyo said.
Toyota sold about 900,000 vehicles in China last year. It had set a target of 1 million sales this year and a long-range goal of 1.8 million by 2015.
Production at other Japanese companies has yet to return to normal more than a week after the biggest demonstrations, which at times degenerated into violent attacks on Japanese run stores and factories in China.
Panasonic, which closed three factories that were damaged in the protests, reopened the last one on Tuesday, but production at that component factory has yet to return to normal, a spokeswoman for the company confirmed.
Japan and China are at odds over a group of islands in the East China Sea, called Diaoyu in China and Senkaku in Japan. A decision by Japan to buy the islands from private owners sparked the latest flare-up in tensions between the Asian neighbors that has smoldered since the end of the World War II.
(Reporting By Tim Kelly Chang-Rann Kim and Kentaro Sugiyama in Tokyo, Maria Ajit Thomas in Bangalore; Nori Shirouzu in Beijing; Editing by Sriraj Kalluvila and Ken Wills)