It’s not just European and American automakers that are beginning to struggle in China’s ultra-competitive new car market. Japanese automakers are feeling the pain, too, with a new report saying that Japanese automaker production in China has fallen by more than half and is now at levels last seen almost 20 years ago.
The figures show the dangers of falling behind on what buyers in the world’s largest new car market want.
Japan Automaker Production Down 63%
In 2020, Toyota, Honda, Nissan, and Mazda built 2.8 million vehicles in China in the six months from April to September, the first half of the Japanese fiscal year. In the same period this year, the total barely topped one million, a 63% drop in six years. According to data from Nikkei, this is the lowest production level for the period since 2008.
On a percentage basis, Honda took the biggest hit. Its production dropped 60% year over year and hit just 131,716 vehicles in the period. That’s 90% below its 2020 peak. Nissan fell 49% and is 80% below its peak with 163,192 vehicles. Toyota built the most, with 663,079 units, but it is 23% less than 2020. Mazda saw a 43% bump against last year, but is still down 52% against 2020.
It probably won’t make Toyota feel any better, but its 18% year-over-year drop actually outperformed the broader market. China’s new car market is down 22% year-to-date, with the country’s economy and changes to incentives for EV and PHEV models getting the blame for much of that.
A lack of EVs seems to be driving the decline. Rising gas prices have driven sales of traditional cars and trucks down 30% in China in the first nine months of 2026. Honda, Nissan, Mazda, and Toyota are all still very dependent on those models, and have struggled with or just avoided the electric market in the country.
Honda, for example, only sold 2,991 EVs in China during the April-September period. It has postponed its new flagship EV, which may not launch at all after the automaker said it couldn’t compete.
How Much Worse Can It Get?
Honda GT EVHonda
The sales figures aren’t good, but don’t expect any of these companies to pull out of China. The report says that China accounted for 17% of Toyota sales last fiscal year, 18% for Honda, and 21% for Nissan. That makes it the second-largest market for all three, after the US.
To help keep factories busy, all four are looking to export more cars to other markets. That includes Nissan sending Frontier Pro PHEV pickups to South America and Mazda sending more EVs to Europe.
The brands are in good company. BMW’s Chinese honeymoon has recently ended, and Porsche sales have plummeted. Meanwhile, Audi has started a new brand specifically for China to try to grow its share. GM’s market share in China is down 6.9% in the first half of 2026; meanwhile, joint venture Changan Ford has seen sales fall from 957,500 in 2016 to 247,000 in 2024 and under 100,000 last year.
CarBuzz Insight – Why This Matters:
2026 Toyota Avalon, Front 3/4 China MarketToyota China
If the Chinese market was ever easy money for outside automakers, it’s not anymore. The locals have made huge leaps forward and are now reaping the benefits at nearly every dealership. With the whole market contracting, though, the environment is about to get even tougher. If legacy automakers want to stay alive in the massive market, they’re going to have to work very hard.
Source: Nikkei
