Just 98,900 Japanese-brand vehicles were sold in the world's largest auto market last month, the China Association of Automobile Manufacturers said in a statement.

A bitter dispute flared in mid-September after Tokyo nationalised an East China Sea island chain also claimed by Beijing, sparking huge protests across China and calls for a boycott of Japanese products.

On a month-on-month basis, Japanese passenger vehicle sales in China fell 38.2 percent in October from September, the group said. The sales figures do not include imports.

Analysts say the row over disputed islands in the East China Sea, known as Diaoyu in China and Senkaku in Japan, has affected Japanese automakers operating in the country and helped boost demand for other foreign brands.

Japan's top three carmakers – Toyota, Honda and Nissan – all produce in China and have said they will scale back production in the country following a sales slump sparked by the backlash.

Toyota said Monday that it expects to sell 200,000 fewer vehicles in China in the second half of its fiscal year and take a 30 billion yen (US$373 million) hit to its bottom line because of tumbling demand from Chinese consumers.

Toyota, Japan's biggest automaker, sold 900,000 vehicles in China in 2011.

Japan's Honda said last week that the firm would cut its full-year sales forecast in China to 620,000 vehicles, from 750,000 units.

"As the territorial dispute between China and Japan... neither subsides nor escalates, Japanese branded vehicles continue to see a rapidly shrinking market share," said Namrita Chow, Shanghai-based analyst for IHS Automotive.

"South Korean and North American, as well as German, brands are expected to steal market share," she said in a research report this week.

China's overall vehicle sales rose 5.3 percent in October from the same month last year, to around 1.61 million units, the industry group said.

For the first ten months of the year, auto sales increased 3.6 percent to 15.7 million units, slightly better than the 3.4 percent growth for the January-September period, it said.

China's vehicle sales rose just 2.5 percent to 18.51 million units last year, compared with an annual increase of more than 32 percent in 2010, as the government scrapped buying incentives and cities put limits on car numbers.

Source:AFP