TOKYO: Japan’s top three carmakers said last week their sales in China plunged last month, a sign that a bitter territorial spat between Tokyo and Beijing is hitting trade between the economic giants.

Toyota saw the biggest drop, with monthly sales slumping 48.9 percent year on year to 44,100 vehicles, while Nissan tumbled 35.3 percent to 76,066 and Honda dropped 40.5 percent to 33,931 units.

The two countries have for weeks been locked in a festering row over the islands in the East China Sea controlled by Japan but claimed by China.

Japanese factories and businesses across China closed or scaled back operations in September over fears they or their workers could be targeted by mobs protesting against Tokyo’s nationalization of the islands, known in Japan as the Senkakus and in China as the Diaoyus.

Toyota—the world’s largest car firm by sales in the first half of the year—and Honda both said they would continue “adjusting” production in China as reports say carmakers plan to roughly halve output at their facilities there. Toyota has nine production sites in China—three assembly plants each in Tianjin in the northeast, the southern city of Guangzhou and central Sichuan province.

A Nissan spokesman told Dow Jones Newswires; “Most of our business is back to normal now, but we are still assessing the situation.”

Rival General Motors may have benefited from the diplomatic battle, with the US firm saying that it sold a record 244,266 vehicles in China in September.

China’s nationwide auto sales slowed last year from 2010 after the government rolled back purchasing incentives and some cities imposed limits on car numbers to ease traffic congestion and cut pollution.