Home Business Stumbling Chinese sales affect Japanese automakers

Stumbling Chinese sales affect Japanese automakers

A quick switch to electric vehicles (EVs) has fully upended the present largest auto market and resulted in a decline in purchases of gasoline-powered automobiles, data indicates, putting Japan’s automakers in a niche sales crisis there.

According to industry data analysis, the total revenue of Chinese Japanese auto brands fell 32% year by year in the first quarter, which was a faster decline than the market as a whole.

The sudden shift in China has also caught other automakers off guard, including Volkswagen AG (VOWG_p.DE), but Japanese automakers stand out due to their underwhelming performance in the rapidly expanding market for electric and plug-in hybrid vehicles.

In a concerning sign of the competition, well-known Japanese automakers may increasingly face outside of their base market, analysts predict that production and margins will be put under pressure in China as automakers reduce output and rates of gasoline-powered vehicles to keep the inventories in check.

Yasushi Matsui, a chief financial officer for car parts supplier Denso Corp (6902.T), stated last week that particularly Japanese automakers are facing a little bit larger inventory of new automobiles in China.

The manufacturing of its Outlander SUV in China has been put on hold for three months, according to Mitsubishi Motors Corp (7211.T), which also announced last week that it will take a $77 million loss for slower-than-expected sales at its joint venture alongside state-owned GAC Group.

Like some other mainstream Japanese automakers, Mitsubishi does not break separate sales numbers for China. Its first-quarter sales in China decreased by 58% from a year earlier, according to industry data analysis.

Another change was the BYD Song, a neat plug-in hybrid built by BYD (002594.SZ), China’s top automaker, which pushed out Nissan’s Sylphy, a famous sedan that had been the country’s best-selling vehicle for three years.

Nissan claimed in email responses that it had sold more than 5 million Sylphys across the nation over the years and that a hybrid electric-drive model is qualified for incentives in Guangzhou.

The business claimed that it was coordinating similar support with the other cities. According to Nissan, the sedan’s hybrid, full-fledged electric drive and e-Power version will be key to the company’s brand reinvention in China.

Although Toyota Motor Corp (7203.T) claims that its cautious approach to all-electric vehicles protects consumer choice, analysts claim that the tactic is hurting sales in China.

Bill Russo, the founder and CEO for Automobility, which is a Shanghai-based consultancy, said Japan is currently the greatest loser in the price battle.

Based on industry data from: China Association of Automobile Manufacturers that were reviewed, Japan’s proportion of car sales in China dropped from a solid 18.5% in the first quarter to 24% in 2020.

According to company figures, sales for Toyota and the luxury brand Lexus declined by 14.5% in the first quarter.

Sales in China fell by 45.8% for Nissan Motor Co Ltd (7201.T) and by 66.5% for Mazda Motor Corp (7261.T) in the first three months. Industry statistics revealed a 38.2% decrease in Honda Motor Co Ltd (7267.T).

Toshihiro Mibe, the CEO of Honda, acknowledged that the carmaker trailed behind Chinese rivals in some software developments.

Mibe, speaking to reporters during a presentation in Tokyo on Honda’s initiatives in autonomous driving and other services like gaming, said that Chinese automakers are far ahead of expectations.

Masatoshi Nishimoto, chief research analyst for S&P Global Mobility, Tokyo, said that while low-cost electric cars and innovative products based on software have drawn consumers in China, Japanese manufacturers have built their name on qualities like durability.

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