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East China Sea islands row a blow to Japanese brands

After September sales tumbled in the wake of tensions over the disputed islands in East China Sea, Japanese carmakers are now trying to restore Chinese consumer confidence — though the effect might be limited.

Toyota Motor Corp.'s two joint ventures in China recently announced they would pay compensation for repairs not covered by insurance on cars damaged during anti-Japanese protests last month.

As well, Toyota owners who intend to trade in damaged cars will be offered a 20,000 yuan (US$3,191.2) subsidy, the company said.

Honda's dealerships have also started to offer free repair for cars damaged in protests and provide alternative vehicles for customers during the period.

Nissan China is considering similar moves, according to spokeswomen Shen Li.

The company is collecting information from dealerships across the country and will respond later with a “comprehensive measure,” she said.

But public relations crisis management by the companies is expected to have little effect in reassuring consumers and regaining growth momentum in the short term, analysts said, noting a diplomatic solution is needed.

“We can tell from the September numbers that political factors can cause a bigger blow to companies than any economic factor,” said Zeng Zhiling, director of Asia Pacific Forecasting of LMC Automotive.

Significant Decline

In September, all Japanese carmakers reported significant sales declines in China, as rising anger over the Japan's “purchase” of the Diaoyu Islands (known in Japan as Senkaku) resulted in a boycott that included automobiles.

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