Japanese automakers face steep decline in China

Japanese automakers like Toyota, Honda, Nissan, and Mazda have seen a sharp drop in their presence in China, a market that once fueled their growth. Production levels have fallen significantly, with some manufacturers producing less than a tenth of what they did at their peak in 2020.

Production numbers show steep declines

Between April and September 2026, the four Japanese automakers produced 1,020,579 vehicles in China, a 32% drop compared to the previous year. Honda saw the biggest decline, producing just 131,716 vehicles, down 60% year-on-year, while Nissan produced 163,192 vehicles, a 49% drop from the previous year.

Chinese manufacturers lead in innovation

Chinese car buyers are shifting their preferences toward digital features, electric vehicles, and software capabilities. Local manufacturers like BYD, Geely, Xiaomi, and SAIC are leading in these areas, offering vehicles that better meet the evolving needs of Chinese consumers.

Suppliers feel the impact of declining sales

The decline in Japanese automakers’ sales is affecting their suppliers as well. Koito Manufacturing, for example, recently announced the liquidation of its Chinese subsidiary, citing the growing competitiveness of local manufacturers and the shrinking orders from Japanese automakers.

Japanese automakers seek new strategies

Leaving China is not a simple option for Japanese automakers, as the market remains crucial for their global sales. Toyota, Honda, and Nissan are exploring new strategies, including partnerships with local firms and expanding exports to other regions, to adapt to the changing landscape.