Honda is reducing car production capacity in China for the first time, as Japanese automakers face declining market share due to competition from local electric vehicle (EV) manufacturers. The slow adaptation to EV technology has proven costly for Japanese companies, leading to a shrinking supply chain in China.
Chinese automakers, particularly BYD, are aggressively pricing their vehicles to gain market share, even in segments traditionally dominated by foreign gasoline-powered cars. In 2023, Chinese brands held 56.2% of the passenger car market in China, while Japanese brands fell to 14.7%. Toyota’s Vice President predicts “difficult years” ahead in the Chinese market.
The Chinese government has been strategically promoting the transition from gasoline to electric vehicles, described as “changing lanes in a race” by a former minister. This includes offering subsidies and preferential policies to encourage the shift to “new energy vehicles.”
Japanese companies supplying parts and materials to automakers in China are also feeling the impact. Some, like Nippon Steel, are withdrawing from joint ventures with Chinese partners. A 2023 survey shows Japanese business expansion in China at its lowest level in a decade.
Japanese firms acknowledge the rapid technological advancement of Chinese companies and stress the need for continuous innovation and cost competitiveness. While Japanese automakers are determined to improve their EV offerings, they face significant challenges in regaining their position in the Chinese market.
Source: Kyodo News, July 26, 2024
https://china.kyodonews.net/news/2024/07/6c47f1ecf945-ev-.html