SHANGHAI (Bloomberg) -- Honda Motor Co. said a person burned a Civic in front of one of its dealerships in Shanghai on Thursday as tensions escalate between Japan and China over the sovereignty of an island group in the South China Sea.
Local police took the unidentified person into custody and are investigating the matter, Natsuno Asanuma, general manager of Honda's China unit in Beijing, said by telephone today, confirming pictures of the incident circulating on China's microblogging Weibo service. Sales are unlikely to be unaffected, she said.
The incident highlights the challenges Japanese companies face as they brace against the revival of a decades-long dispute between Asia's two largest economies, triggered in April when Tokyo Governor Shintaro Ishihara said he may use public funds to buy the islands. Sales of Japanese-brand passenger cars fell last month, compared with gains of more than 10 percent for German, American and South Korean vehicles.
"Japanese automakers will find their lives in China harder and harder if the tensions don't ease off," said Han Weiqi, a Shanghai-based analyst with CSC International Holdings Ltd. "Many consumers are becoming hostile toward Japanese brands and even if they aren't, they would be reluctant to buy a Japanese car on concerns that other people may target and trash their cars."
Protests escalated in China and Hong Kong last month after Japanese activists landed on an island in the East China Sea, known as Diaoyu in Chinese and Senkaku in Japanese.
Demonstrations were held in more than 10 Chinese cities and featured calls for a boycott of Japanese goods, the state-run China Youth Daily reported last month. China Daily said the protests of varying size in cities including Beijing, Qingdao, Guangzhou and Shenzhen were mostly peaceful and the newspaper urged people to be "rational."
Japanese carmakers have been advised to cut back on marketing activities in China, Nissan Motor Co. COO Toshiyuki Shiga said this month. The dispute has affected sales of Japanese-brand cars in August, said Dong Yang, secretary general of the state-backed China Association of Automobile Manufacturers.
Sales of Japanese-brand passenger cars last month fell 2 percent, compared with gains of 27 percent, 20 percent and 13 percent by German, American and South Korean brands respectively, data from the association show.
An online poll conducted by Beijing Times on Thursday and carried on Sina.com showed that 94 percent of the 3,348 respondents said the current tensions between Japan and China will affect their decision buying a Japanese-brand car.
BYD Co., the Chinese automaker part-owned by Warren Buffett's Berkshire Hathaway Inc., will give a BYD Surui car to the owner of the burnt Civic to show support for the person's "patriotic enthusiasm," Hou Yan, head of sales, said in a telephone interview. Hou earlier posted the offer on his Weibo account.