Nissan, Honda Weigh Production Cuts in China Amid EV Competition

Two major Japanese automakers, Nissan and Honda, are reportedly considering scaling back production in China due to fierce competition from local electric vehicle (EV) manufacturers, notably BYD, and the ongoing challenges of a price war, according to a report by Nikkei.

Nissan is said to be in discussions with a local joint venture to potentially slash its annual production by up to 30%, representing a reduction of about 500,000 cars per year. This proposed cut would affect Nissan's eight factories in China, including two operated in partnership with Dongfeng Motor, one of China's prominent state-owned carmakers.

In 2018, Nissan and Dongfeng had unveiled a significant US$9.5 billion investment plan, aiming to introduce 20 new models in China. However, last year saw a 24% decline in Nissan's output compared to 2022, dipping below the 1 million mark for the first time in 14 years. The company is now considering reallocating some of its plants to export products to other Asian countries.

Meanwhile, Honda Motor is contemplating reducing its production capacity by up to 20%, targeting an annual output of approximately 1.2 million vehicles. Honda has already informed major suppliers about the impending capacity cuts. Presently, the Tokyo-based company has a total capacity of 1.49 million vehicles through joint ventures with GAC and Dongfeng.

During a recent investor briefing, Eiji Fujimura, Honda's Chief Financial Officer, underscored the appropriateness of the 1.2 million units production level. Honda has set ambitious goals, planning to introduce 10 Honda-branded EV models by 2027 in China and transition exclusively to selling EVs in the nation by 2035.

The struggle for Japanese automakers in the Chinese market is evident in their declining sales over recent years. While Toyota Motor has managed relatively stable sales, both Honda and Nissan have experienced downturns. Mitsubishi Motors even withdrew all production operations from China. This challenging landscape is compounded by the growing presence of rapidly expanding Chinese EV brands, pressuring foreign competitors to match their state-subsidized low prices.

Representatives from Nissan and Honda have responded cautiously to the reports. A Nissan spokesperson dismissed the report's content without providing additional details, while a Honda spokesperson stated that the decision to reduce production to around 1.2 million vehicles in China has not been finalized, refraining from further comments.