Due to difficulties in competing with domestic electric vehicle manufacturers in China, Japanese automakers are considering whether to reduce losses and focus resources on other important markets to resist Chinese competitors.
Honda, Nissan, Mazda, Mitsubishi Motors, and Subaru all saw a year-on-year decrease in car sales in the Chinese market in the first half of this fiscal year (April September). Toyota's sales in China have not changed much compared to the same period last year, but the automaker believes that the Chinese market is one of the markets that needs special attention.
Among them, Mitsubishi's sales in China decreased by 60%, while Subaru and Nissan decreased by 37% and 20% respectively.
Foreign automakers, including Japanese brands, are gradually being squeezed out of the Chinese market by domestic competitors, including BYD, the leading electric vehicle company. With pure electric vehicles occupying a larger market share, the total sales of passenger cars by Chinese companies have surpassed foreign brands for the first time.
This year, BYD surpassed Volkswagen as the best-selling car brand in China for the first time. Due to Ford and other companies reducing their investment in China, Tesla became the only American car brand on the top ten Chinese car sales list in the first half of this year.
However, Volkswagen and General Motors are still committed to launching plans for electric vehicles in China.
Mitsubishi announced last month that it will withdraw from its joint venture with Guangzhou Automobile Group and end its automotive production in China. Prior to this, Mitsubishi only sold 31826 cars in China the previous year, down from 123581 cars in 2019 before the pandemic.
Mitsubishi Chief Financial Officer Kentaro Matsuoka said, "The pace of transition to electric vehicles is faster than expected, and consumers' brand and niche choices have also undergone significant changes
The constantly changing situation in China, the world's largest automotive market, has made Japanese automakers more reliant on the increasingly strong sales in the US market. Thanks to strong demand from the United States, Toyota, Mazda, and Subaru have all increased their operating profit expectations for the current year by approximately 40% or more.
Mazda slightly lowered its global sales forecast on Tuesday due to poor performance in the Chinese and Thai markets, although the company expects significant sales growth in the US market. Mazda's Chief Financial Officer Jeffrey Guyton stated that the strong sales momentum of electric vehicles in these two Asian countries has led to a decrease in Mazda's demand for gasoline vehicles.
After spending decades developing business in China, Japanese automakers have recently entered a contraction mode. In the past year, Toyota has laid off its contract workers in China, and Honda and Nissan have also reduced production at their Chinese factories.
Before Mitsubishi Motors withdrew from the Chinese market, Stellantis NV decided last year to terminate its joint venture to produce and sell its Jeep brand cars in China. So far, there have been no other Japanese car companies following Mitsubishi Motors' exit from China.
Many car companies, including Nissan, are hoping that the new electric vehicles launched in China in the coming years will help turn the situation around. Mazda's Guyton stated that the company will temporarily maintain its sales network in China to welcome its planned release of new models.
However, executives from several companies have stated that they are studying whether they can better utilize resources and strive to maintain a leading position in important markets that Japanese car companies have long cultivated in Southeast Asia. Chinese automakers have sold a large number of low-cost electric vehicles in the Southeast Asian market.
Japanese automakers have recently entered a contraction mode in China.
One of Mitsubishi Motors' goals when exiting the Chinese market is to expand its core Southeast Asian market. Mitsubishi Motors plans to launch new models in Southeast Asia, including pickup trucks.
Among Japanese automakers, Toyota was the only one to maintain sales in the Chinese market during the half fiscal year from April to September. However, the company lowered its forecast for annual delivery in the Asian market due to uncertainty in China, Thailand, and Vietnam.
Toyota Chief Financial Officer Yoichi Miyazaki said that due to fierce competition, Toyota expects a decrease in electric vehicle sales in China this year. However, due to stable demand for hybrid electric vehicles, Toyota's sales will be able to maintain.
In Southeast Asia and other regions, "Chinese automakers may continue to strengthen their exports of electric vehicles and expand their business," said Yoichi Miyazaki. He said that the problem Toyota faces is when to launch new electric vehicles in the market and consider producing them locally.
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