Asia tension good for Detroit?

Chinese buyers have been shunning Japanese vehicles as a result of a territorial dispute. US automakers could pick up the slack.

By Benzinga Oct 16, 2012 2:46PM

A territorial dispute over a chain of uninhabited islands in the East China Sea has caused a backlash against Japanese brands in China.

Sales by Honda (HMC), Toyota (TM) and Nissan (NSANY) in China have declined sharply, and Detroit automakers General Motors (GM), Ford (F) and Chrysler (FIATY) stand to benefit as a result.

Japanese vehicle makers saw sales fall 29% in September and analysts predict they will lose about a fifth of market share through the end of 2012, amounting to about 200,000 units.

Namrita Chow, an analyst for IHS Automotive based in Shanghai, predicts that General Motors will see an instant increase in sales and could make a profit of $200 million (based on earnings of $1,000 per vehicle) just by picking up the slack.

Although General Motors currently doesn't intend to increase production, other companies may seize the opportunity. So far in 2012, General Motors has sold over two million units in China. Ford has sold 428,000 units and announced plans to invest $5 billion in new plants and infrastructure. Chrysler does not release monthly sales totals and does not have any plants in China, but analysts estimate its sales at around 70,000 units.

In September, Toyota and other Japanese automakers shut down production plants in China due to the rising tensions. According to the Detroit News, the last time Detroit had a chance to grab market share in China was after the 2011 tsunami and earthquake, but as growth in China slows automakers are resisting the temptation to ramp up production of vehicles that might not be sold.

Chow believes that General Motors is one of the companies that stand to benefit as Chinese consumers have cash on hand and are refusing to purchase Japanese vehicles.

Shares of General Motors were moving higher Tuesday, after closing up 1.03% Monday. Year to date, the stock is up more than 20%. Toyota was up more than 1% Tuesday. It climbed 2.3% on Monday and is up more than 15% year to date. Ford shares were firmTuesday after closing up 2.4% Monday. Year to date, the shares are down 5.02%. Honda shares were up more than 1% Tuesday, having closed up 4.83% Monday. Year to date, Honda shares are up 1.6%.

More from Benzinga

Tags:

BenzingaFFIATYgmHMCNSANYTM

< Back to Top Stocks

0Comments

DATA PROVIDERS

Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.

Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by SIX Financial Information.

Japanese stock price data provided by Nomura Research Institute Ltd.; quotes delayed 20 minutes. Canadian fund data provided by CANNEX Financial Exchanges Ltd.

Feedback

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

127	269	463	587	658	614	644	431	262	138
1	2	3	4	5	6	7	8	9	10

Top Picks

SYMBOL	NAME	RATING
COP	ConocoPhillips	10
NWS	News Ord Shs Class B	10
YHOO	Yahoo! Inc	10
TJX	TJX Companies Inc	9
AMX	America Movil ADR Rep 20 Ord Shs Series L	9

LATEST POSTS

Scary story: the 2013 market looks like 1987

All hail the bull market, which ended the week with a big rally. But it also is starting to look a little like 1987, which suffered an epic blow-out.

FIDELITY VIEWPOINTS

VIDEO ON MSN MONEY

Feedback

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Bing Search

Top Stocks