A lingering disagreement over a group of islands in the East China sea between Japan and China has indirectly led Japanese automobile makers Nissan (PINK:NSANY) and Toyota (NYSE:TM) to close down factory production in China.
The decision puts Toyota’s sales target of 1 million automobiles sold in China at risk at a time when China’s economy is slowing, with a recent factory survey showing China’s manufacturing sector contracted the most in the last nine years according to Reuters.
The islands in question, called Diaoyu in China and Senkaku in Japan, were bought by Japan from private Chinese owners, and the move ignited tensions that have festered since the end of World War II. The demonstrations in China reverted to violence, as Panasonic (NYSE:PC) had to close three plants damaged in the protests, and production levels have yet to return to pre-demonstration levels.
The details of the plant closures are sketchy, but Japan’s Ahahi newspaper indicated Toyota is expected to completely close off Chinese production in October while stopping all exports.
Nissan indicated through Reuters it will halt production in one joint venture facility in China next week and extending through a planned national holiday.
Toyota sold 90,000 cars in China last year, and long-term is hoping to sell 1.8 million by 2015.
-Written by InvestorPlace Staff