Japan auto giants warn on China dispute, strong yen

TOKYO (AFP) - A Chinese boycott of Japanese goods sparked by a territorial dispute threatens to undermine the healthy recovery the nation's top automakers made after last year's quake-tsunami disaster, analysts say.

Despite posting profits in the first half of the year that left their stumbling electronics counterparts in the dust, the auto sector warned that the slump in China sales and a strong yen were putting the brakes on growth.

The bitter row has seen demand for Japan-brand products plunge in China, the world's biggest vehicle market, while the persistently high yen makes manufacturers' products less competitive overseas.

"The China factor is still unpredictable as this is politics, not business," said Mr Shigeru Matsumura, auto analyst at SMBC Friend Securities in Tokyo.