Japan's largest automakers are reporting a sharp sales drop in China in September, confirming fears that a heated territorial dispute is affecting crucial trade between Asia's two largest economies.
Toyota said Tuesday that sales of new vehicles in China dropped nearly 49 percent last month compared to a year earlier, while Honda sales dropped more than 40 percent and Nissan fell more than 35 percent.
Last month, Japan purchased a group of disputed islands in the East China Sea that are also claimed by Japan.
The move prompted mass boycotts of Japanese goods and sometimes violent anti-Japan protests across China, forcing many Japanese factories there to suspend operations and cut production.
Toyota and Honda dealerships were burned in one Chinese city, while videos circulated on the Internet showing rioters smashing Japanese vehicles.
While the unrest has died down, observers say many Chinese may be reluctant to purchase Japanese-made goods while diplomatic tension remains.
The dispute has also affected Japan's smaller automakers. Mazda said last week its September sales in China dropped 35 percent from a year earlier. Mitsubishi reported a drop of 63 percent.
It appears that non-Japanese automakers may be benefiting from the dispute. In September, Germany's BMW said China sales surged 55 percent, while Audi rose by 20 percent. South Korea's Hyundai Motor increased by 15 percent.
The two Asian powers have failed to find a diplomatic resolution to the dispute surrounding the archipelago, known in Japan as Senkaku and in China as Diaoyu. The uninhabited islets are surrounding by rich fishing grounds that are also thought to contain vast energy deposits.
Some information for this report was provided by AP, AFP and Reuters.