Japanese Auto Giants See Continued Sales Decline in China, Accelerate Localization to Tackle Market Challenges

In June 2024, sales of Japan’s top three automakers—Honda, Toyota, and Nissan—all declined across the board in China. Honda’s monthly sales plummeted by 44.5% year-on-year, with its cumulative sales for the first half of the year down 34.7% year-on-year. Toyota and Nissan saw their H1 sales drop by 17.1% and 15.0% year-on-year, respectively. The market share of Japanese-branded vehicles in China has continued to shrink, falling to 10.5% in May 2024—a significant decline from its peak in 2023. Amid declining sales, all three companies are facing financial pressure: Honda forecasts its first annual net loss since going public in fiscal year 2025; Nissan has reported substantial losses for two consecutive years; and although Toyota’s revenue has grown, its net profit has dropped sharply year-on-year. This downturn is not a short-term fluctuation but rather a culmination of a long-term trend. Nissan’s sales have been steadily declining since 2019, Honda has shown weak performance since 2021, and Toyota has experienced consecutive declines starting from 2022. While fuel-powered vehicles have been affected by oil price volatility, the primary reason for this erosion lies in the rapid advancement of new energy vehicles (NEVs) and intelligent technologies in China, which has significantly weakened the competitiveness of Japanese brands that remain heavily reliant on internal combustion engine vehicles. To address this challenging situation, all three automakers are accelerating their localization strategies in the Chinese market. Honda has shifted away from its previous model of exclusively importing overseas-developed vehicles, now entrusting GAC Honda with leading vehicle definition efforts. It has also partnered with Huawei and Momenta to enhance its intelligent capabilities and plans to launch multiple new models specifically developed for the Chinese market by 2027.