Losing share

But even before the islands row slashed sales, Japanese carmakers were losing market share in China to European, US and South Korean competitors, mostly due to their lack of competitive new models.

The combined market share of Japanese carmakers in China peaked in 2008 at 31.4 percent, but then began to slide, hitting 22.6 percent at the end of August this year, according to statistics from LMC Automotive.

The trend is continuing, with fewer potential new car buyers in China considering buying a Japanese car, even before the diplomatic row began, shows a JD Power survey published earlier this year. It found that only 24 percent of potential new car buyers in the country intent to buy a Japanese car. The proportion was 32 percent in 2009.

The anti-Japanese protests last month and its aftermath are the latest blow to Japanese carmakers, coming just they started to get more aggressive in China, analysts said.

In March Toyota launched a new strategic plan in China named Cloud Action to accelerate growth by brining advanced technologies and "building exciting" products.

"We are concerned that Japanese carmakers may resume a cautious strategy and hesitate to invest in China (after the political dispute)", said Zhu Bin, an analyst with IHS Automotive.

It would be "unfavorable" in such a highly competitive market if they postpone or cancel their original investment plans, Zhu said.

hantianyang@chinadaily.com.cn