Analysis: Japanese automakers face ‘made in China’ sales slump
By Daniel Leussink TOKYO (Reuters) – Japanese automakers are facing a sales slump in China, data shows, as a rapid shift to electric vehicles (EVs) has rocked the world’s largest auto market and led to a plunge in car purchases petrol cars. Total sales of Japanese car brands in China fell 32% year-on-year in the […]
By Daniel Leussink
TOKYO (Reuters) – Japanese automakers are facing a sales slump in China, data shows, as a rapid shift to electric vehicles (EVs) has rocked the world’s largest auto market and led to a plunge in car purchases petrol cars.
Total sales of Japanese car brands in China fell 32% year-on-year in the first quarter, more than double the rate of the overall market contraction, industry data analyzed by Reuters showed.
While other automakers like Volkswagen AG have also been caught out by the sharp shift in China, Japanese automakers are notable for their limited entry into the fast-growing category of electric and plug-in hybrid sales.
Production and margins will come under pressure in China as automakers cut production and prices of gasoline cars to control inventories, analysts say.
“Japanese automakers in particular are dealing with a slightly higher inventory of new cars,” Yasushi Matsui, chief financial officer at parts supplier Denso Corp, said in China last week. “They’re making adjustments.”
Mitsubishi Motors Corp. said last week it had suspended production of its Outlander SUV in China for three months and would take a $77 million charge for slowing sales at its joint venture with state-owned GAC Group.
Mitsubishi, like some other Japanese automakers, does not disclose sales figures in China. Industry data analyzed by Reuters shows that sales in China fell 58% year-on-year in the first quarter.
In another shift, Nissan’s Sylphy, a sedan that had been China’s top-selling car for three years, was displaced last year by the BYD Song, a plug-in hybrid made by BYD, China’s largest automaker.
In emailed responses, Nissan said it had sold more than 5 million Sylphys in China over the years, adding that an electric-powered hybrid version was eligible for incentives in Guangzhou.
The company said it was working with other cities on similar support. The electric-powered e-Power hybrid version of the sedan would be central to Nissan’s brand transformation in China, the company said.
Japan’s declining share of car sales in China, https://www.reuters.com/graphics/CHINA-AUTOS/JAPAN/akpeqjmjnpr/chart_eikon.jpg
‘JAPAN IS THE BIGGEST LOSER’
Toyota Motor Corp has said its slow-moving approach to all-electric cars protects consumer choice, but the strategy is costing sales in China, analysts say.
“Japan is the biggest loser of the price war so far,” said Bill Russo, founder and CEO of Automobility, a Shanghai-based consulting firm.
“As EVs become more affordable, they become more attractive to the core buyers that have resisted so far, the buyers of foreign brands. So you can see it on the wall.”
Japan’s share of car sales in China fell to 18.5% in the first quarter, down from 24% in 2020, according to industry data from the China Association of Automobile Manufacturers, analyzed by Reuters.
Toyota and its luxury brand Lexus reported a 14.5% drop in sales in the first quarter, company data showed.
“We need to step up our speed and efforts to resolutely meet customer expectations in the Chinese market,” Toyota CEO Koji Sato said in an interview last month.
Nissan Motor Co Ltd posted a 45.8% sales drop in China and Mazda Motor Corp sales fell 66.5% in the first quarter. Honda Motor Co Ltd had a 38.2% decline, industry data showed.
Honda chief executive Toshihiro Mibe acknowledged that the automaker is lagging behind Chinese rivals on some software technologies.
China’s automakers are “further ahead of us than we expected,” Mibe told reporters at a presentation in Tokyo, focusing on Honda’s efforts in autonomous driving and services like gaming.
Japanese automakers built their reputation on factors such as sustainability, but the shift in China shows the appeal of lower-cost EVs and new software-based offerings, said Masatoshi Nishimoto, principal research analyst at S&P Global Mobility in Tokyo.
“Japanese automakers could face a similar struggle in the United States as they did in China,” he said.
($1 = 136.8700 yen)
(Reporting by Daniel Leussink; Additional reporting by Brenda Goh; Editing by Jamie Freed)