According to reports, Nissan is currently negotiating with its joint venture in China to reduce production capacity by 30%. At the same time, Honda also plans to reduce its production capacity in China by 20%.
According to reports, the production reduction plans of the two car companies are due to the rise of China’s new energy vehicles and the increasingly fierce competition from local manufacturers such as BYD. These Japanese car manufacturers used to dominate the introduction of technology to China, but are now forced to rethink their strategies. A spokesperson for Honda said that the company’s car production in 2023 is 1.2 million units, with a capacity of 1.49 million units, so there is “still room” for capacity; Nissan’s representative did not immediately comment on this. Under the government’s leadership, the transition of the traditional automotive industry to the new energy vehicle industry continues to advance, with the price and product competitiveness of new energy vehicles in the market constantly increasing. At the same time, the gap with Japanese cars is gradually narrowing. In response to this phenomenon, Japanese car companies will reduce their presence in the Chinese market and focus more on the more competitive North American and Southeast Asian markets. Nissan’s current production capacity in China is about 1.6 million units per year. In this situation, car companies are discussing reducing annual production capacity in China by about 500,000 units, equivalent to 30% of China’s annual production capacity. Nissan and Dongfeng Motor’s joint venture factories in provinces such as Hubei and Henan have a total of 8 factories. In the future, the two companies plan to use underperforming factories as production bases for export to neighboring Asian countries. In 2023, Nissan’s production volume in China decreased by 24% compared to the same period last year, with a total of 793,000 units. Five years ago, in 2018, Nissan’s sales in China were 1.56 million units, ranking first among Japanese brands, but the current sales are only 50% of its peak period.
Honda’s joint venture companies “GAC Honda” and “Dongfeng Honda” with Chinese state-owned giant Guangzhou Automobile Group and Dongfeng Motor Corporation have a combined annual production capacity of 1.49 million units. It is reported that Honda also plans to reduce its production capacity in China by 20% to around 1.2 million units. Currently, negotiations are underway with local joint venture partners, and proposals have also been made to major customers. Toyota, one of the three major Japanese car companies in China, is the only brand that has not announced a production cut plan. Toyota’s sales in China last year decreased by 2% year-on-year, reaching only 1.9 million vehicles. In order to cater to the shift in China’s new energy vehicle market, Toyota has launched models such as “bZ4x” and “bZ3”, but the effect is not significant.
In 2023, the market share of domestic car brands in China’s passenger car sales has increased to 56%. Meanwhile, in the new energy vehicle market, the market share of Japanese brands such as Nissan and Honda has remained stagnant, while domestic new energy vehicle brands account for as much as 30%. The increasing price competitiveness and product competitiveness of domestic brands such as BYD, Geely, and Great Wall have weakened the competitiveness of Japanese car companies in the terminal market. In the Chinese car market, German and Korean car companies have also encountered difficulties. In 2023, the market share of passenger car brands from various countries has decreased in the Chinese market, with Korea decreasing by 3.1% from 2019 to now account for 1.6%, and Germany decreasing by 6.4% to now account for 17.8%.
In addition, in 2023, China surpassed Japan in the number of car exports, becoming the world’s number one for the first time. China has expanded its production scale of electric cars and increased its presence in overseas markets. On the other hand, Mitsubishi announced its withdrawal from the Chinese car market in October 2023, and Mazda is reevaluating its joint venture in China.