Japanese automotive giants Nissan and Honda are reportedly deliberating production cuts in China, prompted by intensified competition from local electric vehicle manufacturers, notably BYD, according to a report by the Nikkei newspaper released on Tuesday.
Nikkei’s report suggests that Nissan is contemplating a potential reduction of up to 30 percent in its annual production in the world’s largest auto market, amounting to approximately 500,000 cars. Similarly, Honda is said to be considering a reduction of around 20 percent, equating to approximately 1.2 million vehicles.
While both Nissan and Honda refrained from confirming the specific details outlined in the report, a Nissan spokesperson dismissed its contents, and Honda chose not to provide further comments on its production plans.
According to Nikkei, Nissan is exploring restructuring its production facilities in collaboration with Chinese partners and examining options to utilize excess capacity for exporting vehicles to other Asian countries.
In recent years, both Nissan and Honda have witnessed a decline in sales in China. Nissan, the third-largest automaker by volume in Japan, experienced a 16.1 percent drop in sales to less than 800,000 vehicles last year, while Honda, Japan’s largest carmaker after Toyota, saw a roughly 10 percent decrease in sales to 1.2 million vehicles during the same period.
The emergence of Chinese automotive brands has significantly impacted the market share of foreign competitors in China, necessitating strategic adjustments from established players.
Nissan operates eight factories in China through a joint venture with Dongfeng Motor, while Honda operates four factories through a JV with GAC Group and three additional factories through another JV with Dongfeng. Details regarding potential production cuts from Dongfeng and GAC Group were not immediately available.
In response to the evolving market dynamics, Nissan announced plans last November to commence exports of cars from China to other overseas markets starting next year, targeting initial annual volumes of 100,000 to 200,000 units.
Acknowledging the challenges, Nissan’s CFO, Stephen Ma, conceded last month that the company had revised its sales forecast due to its performance in China.
