Japanese Auto Giants See Sales Slide in China Amid EV Transition and Mounting Financial Pressure

In the first half of 2024, Japan’s “Big Three” automakers—Toyota, Honda, and Nissan—all reported double-digit year-on-year declines in sales in the Chinese market. Specifically, Honda China’s terminal sales in June totaled 32,500 units, down 44.5% year-over-year; its cumulative sales from January to June reached 205,800 units, a 34.7% decline compared to the same period last year. Toyota’s China sales for the first half of 2024 amounted to 694,700 units, down 17.1% year-over-year, while Nissan sold 237,000 vehicles during the same period, a 15.0% decrease. Amid rising fuel prices driven by tensions in the Middle East, demand for gasoline-powered vehicles has been suppressed. Japanese automakers generally believe that the internal combustion engine (ICE) vehicle market is unlikely to recover in the near term. Meanwhile, China’s auto market is accelerating its transition toward new energy vehicles (NEVs). The heavy reliance of Japanese brands on ICE vehicles has led to a continuous erosion of their market share. According to data from the China Passenger Car Association (CPCA), the Japanese brands’ market share in China fell to 10.5% in May 2024—down 6.5 percentage points from their peak in 2023. Their cumulative retail sales for the first five months of 2024 totaled approximately 892,500 units, down 17.6% year-over-year. Looking at longer-term trends, Nissan’s China sales have declined consecutively since 2019. In 2025, Nissan sold around 653,000 vehicles in China, down 6.26% year-over-year—marking its seventh consecutive year of decline. Honda’s sales have shown no signs of recovery since 2021; in 2025, it sold 645,300 vehicles in China, a 24.28% drop year-over-year, representing its fifth straight annual decline. In contrast, Toyota sold over 1.78 million vehicles in China in 2025, up 0.225% year-over-year, making it the only one among the three Japanese giants to achieve positive growth. Financially, Honda reported its first annual loss in fiscal year 2025, with an operating loss of JPY 414.3 billion and a net loss attributable to owners of JPY 423.9 billion. Losses related to its pure electric vehicle (BEV) business alone reached JPY 1.58 trillion. Excluding this factor, its core automotive business generated an operating profit of just JPY 42.5 billion, equivalent to an operating margin of approximately 0.3%. Nissan posted a net loss of JPY 533.1 billion in FY2025—narrower than the previous year but still marking its second consecutive year of massive losses, with an annual operating margin of just 0.5%. Although Toyota remained profitable, its net profit for FY2025 declined by 19.2% year-over-year to JPY 3.85 trillion, reflecting a trend of revenue growth without corresponding profit expansion. To address these challenges, all three automakers are accelerating strategic adjustments in China. Honda is shifting away from its traditional model—where product development was led by its Japanese headquarters—and moving toward developing new models based on China-local platforms, supply chains, and intelligent technologies. GAC Honda plans to launch multiple new models starting in 2027, covering fuel-powered, hybrid, and new energy vehicles, including self-developed models based on a China-exclusive NEV platform. It will also integrate local suppliers such as Huawei and Momenta to enhance smart cockpit and advanced driver-assistance capabilities. Nissan, meanwhile, has positioned China as the core source for its global speed-to-market, cost efficiency, and exports. It aims to strengthen its NEV lineup and expand exports, targeting one million annual sales in China by FY2030. Models such as the N7, Frontier Pro, and NX8 are already slated for export to Latin America, Southeast Asia, and the Middle East.