Japan's car production in China is declining rapidly. The cumulative production from April to September announced by various car companies on October 29 was 1,025,79 vehicles, a decrease of 32% compared to previous years. Compared to the peak in 2020, the decline is 63%. Due to the sharp reduction in demand for gasoline cars, Honda's production has decreased by about 90%, and the poor sales situation is becoming more serious.
The Japan Economic News compiled data on the production volumes of four companies with manufacturing bases in China, including Toyota and Nissan. Production levels dropped to their lowest point since 2008. Compared to 2020, when production reached its peak at approximately 2.8 million vehicles, production has decreased by nearly 1.8 million vehicles in just six years.
The biggest decline was seen at Honda, with production dropping to 131,716 units, a decrease of 60% year-on-year. This is about a 90% drop compared to the peak in 2020. In recent months, production has decreased by about 70% year-on-year, fluctuating between 10,000 and 20,000 units per month.
Nissan had 161,192 vehicles, a decrease of 49% compared to the previous year, and a decrease of 80% compared to the peak period. Toyota had 661,379 vehicles, a decrease of 18% compared to the previous year, and a decrease of 23% compared to 2020. Mazda saw a 43% increase compared to the previous year, but its production still decreased by 52% compared to 2020.
From January to September, the Chinese new car market decreased by 22% year-on-year. This is mainly due to the reduction of purchasing subsidies for new energy vehicles such as pure electric vehicles during the economic cycle.
A further blow comes from the increase in crude oil prices due to the tensions in the Middle East. Except for new energy vehicles, sales of new cars decreased by more than 30% from January to September. Compared with the same period in 2020, the decline reached 60%. Since Japan's main vehicle products are gasoline vehicles, including hybrid vehicles (HV), these are significantly affected.
Honda's sales in China decreased by 48% from April to September, reaching 161,372 units. Nissan's sales dropped by 46% due to a significant decline in its main gasoline model, the "Soul", reaching 181,854 units.
In the field of EVs that continue to attract gas-powered vehicle users, Japanese automakers have not shown any competitiveness. Honda's EV sales decreased by 62% from April to September, reaching only 2,991 units. Due to the declining sales, the flagship EV "GT," which was originally scheduled to be released before December 2025, has been postponed indefinitely.
The electric vehicle sedan “N7,” which was launched in April 2025, saw a 76% decrease in sales from April to September. Although the model performed well at its initial launch, in a market where new models are continuously being introduced, the impact of the new vehicle is unlikely to last.
In the 2000s, as the Chinese automotive market expanded, Japanese automakers built new or expanded factories in China, making it an important market alongside North America. However, since 2020, with a shift towards new energy vehicles, local companies like BYD have emerged as leaders. As sales of traditional fuel vehicles declined, the market share of Japanese cars plummeted, and production also dropped back to pre-expansion levels.
Just as demanded by car manufacturers, Japanese parts companies entering China have also reduced their operations. On October 20th, Komiyama Manufacturing announced that it would dissolve and liquidate its subsidiary that produces car lights in China. Although some companies have tried to expand their business with local car manufacturers, the price competition with local parts manufacturers is very fierce.
American consulting firm Mobility Global predicts that the production of four Japanese car manufacturers in China will decline by 47% by 2030, dropping to 1.6 million units.
However, it is also difficult to withdraw easily. In Toyota's global sales for the fiscal year 2025, China accounts for 17%, Honda for 18%, and Nissan for 21%. For these three automakers, the size of the Chinese market is second only to that of the United States, and the importance of the Chinese market remains significant.
China is not only the world's largest automotive market, but also leads in the competition for autonomous driving and electric vehicle technologies. For Japanese automakers, China has become an important market for obtaining advanced technologies.
Japanese automakers are placing their hopes for survival on the efficiency of their production and sales systems, as well as turning them into export bases. Toyota announced on October 8 that it has signed new strategic cooperation agreements with China's largest state-owned automobile company, Guangzhou Automobile Group, and China National Automotive Group. The company will restructure its two joint ventures locally to further promote the electrification and intelligence of automobiles.
Nissan plans to expand its exports from China overseas. Currently, it has already started exporting to Mexico, and in the future, it will expand to Central and South America, as well as Southeast Asia. Mazda will also launch EVs produced in China in regions around the world, including Europe and Australia.
Abroad, competition with Chinese companies is also becoming increasingly fierce. In September, China issued guidelines regarding the overseas operations of automotive companies, requiring companies to comply with laws and regulations and to establish high-quality after-sales service systems. This indicates that China is making every effort to enhance the image of its automobiles and actively exploring overseas markets.
Even Nissan and Honda, which once had a huge influence in the Chinese market, are now facing difficulties in surviving. Japanese automakers are being forced to make fundamental changes to their operations in China.
As of October 29, eight Japanese car manufacturers reported a global production of 11.643 million units, a decrease of 1% compared to the previous year. This is the second consecutive year of decline in production. Within Japan, domestic production increased by 2%, reaching 3.9715 million units. Overseas production decreased by 3%, reaching 7.6729 million units.
