Japan's top three car makers said Monday annual sales in China last year slumped as a consumer boycott sparked by a nasty territorial row took a heavy toll.
Nissan – which has the most exposure to China of the three – said sales in the world's biggest vehicle market last year fell 5.3 per cent to 1.18 million units.
"The Sino-Japanese territorial disputes that began in September have seriously affected Nissan's sales and marketing activities in China," it said in a statement.
Toyota, Japan's largest car maker, said its China sales in 2012 fell 4.9 per cent to 840,000 vehicles, although it forecast a recovery this year, announcing an annual sales target above 900,000 units.
Honda, meanwhile, said sales in China declined 3.1 per cent last year to 598,576 vehicles, its second straight annual decline, after the 2011 earthquake-tsunami disaster battered Japanese manufacturers' results.
A long-standing diplomatic dispute flared badly in mid-September after Tokyo nationalised East China Sea islands also claimed by Beijing, sparking huge protests across China and boycotts of Japanese products.
The row over the Tokyo-controlled islands, known as Diaoyu in China and Senkaku in Japan, hurt Japanese car makers with operations in the country while boosting demand for other foreign brands.
Japan's top three car makers, which all have manufacturing facilities in China, scaled back production as sales slumped.
Despite predictions of a bounce back this year, there are plenty of uncertainties that may slow a recovery including new governments in China and Japan, said Tatsuya Mizuno, an auto analyst at Mizuno Credit Advisory.
"It appears that Japanese auto sales are on course to recover in China, but no one knows when the dispute will flare up again – nothing has been resolved," Mr Mizuno said.
"There is also concern about the future of the Chinese economy. The prospects for a full recovery of Japanese cars in China are still obscure."