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Foreign Automakers Struggle in China’s Shifting Market

Japanese and Western automakers are struggling in the Chinese market, with steeper sales declines in 2023 compared to the Chinese auto market more broadly.

Honda’s 2023 sales fell 10% to 1.23 million vehicles in China while Nissan’s sales dropped 16% to 790,000 units. Toyota sales were flat at 1.9 million units. Mitsubishi Motors announced in October 2022 that it would cease production in China due to poor sales. Within about two months Mitsubishi’s dealership in Guangzhou was replaced by an outlet for a Chinese auto brand.

Volkswagen’s 2023 sales in China rose 2% to 3.23 million while sales of GM’s Buick brand fell 20% and Cadillac sales dropped by 8%.

Sales in China of electric and plug-in hybrid passenger vehicles increased by 30% in 2023, with Chinese automaker BYD expanding its selection of electric car models. China’s market for gasoline passenger vehicles shrank 7%, while the broader market for passenger vehicles (including electric vehicles) grew 4% to 21.92 million units.

Japanese brands Honda and Nissan lagged in electric vehicle sales even as their gasoline models face fierce price competition from Chinese brands. Japanese automakers face hard choices on where to focus limited resources. They face stiff price competition from Chinese manufacturers, though sales in China remain high enough to warrant continued competition in the electric vehicle segment. The plug-in hybrid segment may get less attention going forward.

Fierce price competition has spread to affect gasoline car models, and major foreign brands have cut prices substantially. Japanese brands offered steep discounts, with discounts on new Hondas averaging $3,500 and Nissan discounts averaging $3,200. Meanwhile, the average discount on BYD vehicles averaged just $750.

Source: Nikkei Chinese, February 22, 2024