"Headwinds" in the Chinese market Japan automakers feel a sense of crisisMay 5 at 26:18
There is a market where the top executives of Japan automakers are feeling a sense of crisis about rapid change.
It is the world's largest automobile market in China.
With the rapid spread of EVs = electric vehicles, Chinese manufacturers are increasing sales, and Japan manufacturers that have shown their presence so far are struggling.
We interviewed Japan what is happening on the ground and whether there are any measures for manufacturers to catch up.
(Economic Affairs Department: Akira Tamaki, Tsutomu Yamane, Airi Enoshima / Reporter, China General Bureau Ryoto Iga)
A sense of crisis spreading among Japan manufacturers
The Chinese market, which has been maintained by overseas manufacturers such as Germany and Japan for many years, is now changing.
It is precisely that the popularity of cars from Chinese manufacturers is growing rapidly.
The top management of Japan automobile companies has also expressed a sense of crisis in response to this situation. Although the high cost of raw materials contributed to the decline in profits for each company's financial results for the last fiscal year, the overall figures were solid due in part to the effect of the yen's depreciation.
However, the words of the top management of each company referring to the Chinese market conveyed the difficult situation.
Makoto Uchida, President
of Nissan Motor Co., Ltd.: "I felt firsthand that the speed of change that is happening is far exceeding our expectations, and we cannot fully cover the decline in production and sales in the Chinese market in other markets."
Toshihiro Mibe, President
of Honda: "Chinese manufacturers are ahead of us than we expected, and the software area in particular is evolving further."
Japan manufacturers' struggles are also evident in their sales data.
Compared to the same period last year, the sales volume of each automaker from January to April fell sharply by -1.4% for Nissan Motor Co., Ltd. and -29.9% for Honda, and for Toyota Motor Corporation, which decreased slightly by -29.8%.
Other manufacturers, such as Mazda, are also struggling.
Since China's overall sales volume has grown by +2.4%, the decline in Japan manufacturers is serious.
Some manufacturers stop production
In addition, some manufacturers have been forced to suspend local production.
Mitsubishi Motors and Chinese automakers jointly produce gasoline vehicles, its mainstay SUV, but stopped production in March due to sluggish sales of new models.
The company is discussing future measures with local partners.
Takao Kato, President
of Mitsubishi Motors, said, "The environment in China continues to be very difficult, and we recognize that it will continue to be difficult this fiscal year.
"Explosive growth" of EVs
One of the major reasons for the sluggish performance of Japan manufacturers is the accelerating "EV shift" in China.
In China, EVs, plug-in hybrids, and fuel cell vehicles are being promoted as environmentally friendly "new energy vehicles."
In 1, its sales reached 2022.688 million units per year, nearly doubling from 352.<> million units the previous year.
Industry groups have called it an explosive increase, accounting for one-quarter of all new vehicle sales, including engine vehicles (4.1 million units in China as a whole).
EVs alone totaled 2686.536 million units, far exceeding the more than 2022.420 million new vehicle sales in Japan in 270.
On the other hand, due to the shift to EVs, sales of engine-powered vehicles decreased by about <>.<> million units compared to the previous year.
This situation has led to a decline in sales by Japan automakers that specialize in engine-powered vehicles.
When we talked to dealers of Japan manufacturers, some of them expressed confidence that they still have an advantage among engine vehicles and are selling well, but they were worried that there were few EV models and that competition with Chinese manufacturers was intensifying.
Discount competition breaks out?
With the acceleration of the shift to EVs, competition among companies has become even more fierce as engine vehicles become more frustrating, and there are a number of moves to discount prices.
At the end of 2022, the subsidy system for EVs and other new energy vehicles ended, and when EV manufacturers moved to reduce prices, the movement to reduce prices for engine vehicles also spread.
According to Chinese media reports, as of mid-March, nearly 3 companies had cut their prices, an unusual situation in which industry groups called on manufacturers and the media not to inflame price reduction competition.
Motor shows are also "all about EVs"
The shift to EVs in the Chinese market is expected to accelerate further, with new energy vehicles expected to reach 1 million units sold in one year, accounting for one-third of total sales.
At the world's largest motor show held in Shanghai in April, many of the new models unveiled for the first time were EVs and other new energy vehicles, and it was reported that they were all EVs in the local area.
The EV exhibited also had a diverse lineup, from small cars that cost less than 100 million yen for Japan yen to luxury cars that cost about 2000 million yen, and in terms of performance, it is commonplace that they can run 1 or 500 km on a single charge.
Furthermore, the evolution of Chinese manufacturers was shown by the equipment in the car.
Equipped with advanced displays like tablet terminals, touch panels and voice recognition to operate air conditioners and windows, and other displays at the rear that allow you to enjoy movies, each company promoted the functions of "EV+Alpha".
Under these circumstances, experts and industry insiders who visited the motor show commented that the presence of Japan manufacturers was weak.
Becoming the "factory of the world" with EVs?
The rise of Chinese automakers, fueled by the EV shift, is not limited to the Chinese market.
Including figures from foreign automakers, new car exports from China exceeded 2022 million units for the first time in 300.
Exports to Russia, which is subject to Western sanctions, are increasing, but they are going on the offensive in EV sales in Europe and Southeast Asia.
China's exports of new vehicles from January to March were 1.3 million units, exceeding the Japan's 107,95 units, which was also reported in the Chinese media.
China's automobile industry has lagged behind Japan, the United States, and Europe, but its presence is increasing as the shift to EVs progresses.
In particular, Southeast Asia is a market that can be called a "stronghold of Japan," in which Japan manufacturers have occupied a high market share Japan and there is a growing sense of caution.
The key to rewinding is "software" and "speed"
Will Japan manufacturers be able to overcome this difficult situation?
Each company sees "software" and "speed" as the keys to competition.
Toyota has set a goal of selling 2026.150 million EVs a year globally by <>, but increasing sales in China is essential to achieving it.
In order to accurately grasp the needs of the rapidly changing Chinese market, we will accelerate the localization of product development and strengthen our competitiveness.
Hiroki Nakajima, Vice President
of Toyota Motor Corporation, said, "Competition in electrification of EVs and other vehicles has become commonplace, and competition in the intelligence part is being actively conducted as a differentiating factor Japan.
In addition, Nissan has decided to increase the ratio of EV sales in China from 2026% to 15% in FY23.
In order to achieve this goal, we intend to flexibly introduce new EV models.
Ashwani Gupta, COO of Nissan Motor Co., Ltd.: "In the Chinese market, customers themselves want electrified vehicles regardless of incentives,
and software is becoming the most important. We need to speed up time to market and review the way we design, produce and sell."
In addition, Honda has also decided to bring forward its electrification plan in the Chinese market.
The company had planned to sell all new vehicles by 2040 to be EVs or fuel cell vehicles (FCVs), but the company plans to bring the target five years forward to 2035 and sell only EVs.
Next year, we will launch three new EVs and introduce the latest safety technologies ahead of other markets.
In addition, from this month, we will introduce a new connected service dedicated to the Chinese market that utilizes big data, and this is a strategy to quickly respond to local needs.
Toshihiro Mibe, President
of Honda: "We will create new value while thinking about something different from Chinese manufacturers.
Experts "Bold reforms"
Will these measures to turn things around work?
Experts familiar with China's automotive market point out the need for rapid change.
Yushin Yusumi, Senior Researcher, Mizuho Bank: "Japan manufacturers have an advantage in gasoline vehicles,
but the market is shrinking. If some measures are not taken, I think the number of units sold will definitely decrease gradually. In order for Japan manufacturers to survive, it will be difficult if they do not drastically change not only manufacturing, but also the entire supply chain, including design, production, procurement, sales, and after-sales service.
In the luxury car market, EVs from Tesla and BMW are increasing their share. If there is a chance left for Japan manufacturers, it is EVs for the masses. That's because EVs for the masses have not yet become an oligopoly. We should thoroughly research consumer needs in China and launch cost-effective EVs equipped with the latest software."
How to compete in the world's largest car market
Many automakers in Japan say that they expected EVs to become more popular in the Chinese market, but they did not expect such rapid changes.
Japan manufacturers, which have strengths in engine vehicles, have maintained their brand strength in China due in part to their high safety and fuel efficiency, but the rapid shift to EVs in China is now a headwind.
Companies that Japan "speed to respond to changes" are often pointed out as issues, but I feel that there is no need to wait to respond to changes in the market.
On the other hand, there are leaders of Japan manufacturers who say, "If we can catch up in the Chinese market, we can compete in the world."
Will Japan automakers be able to turn the pinch of the "rapid EV shift" into an opportunity and launch an attractive EV that can compete with local manufacturers?
The performance in the world's largest market in China will be a test of whether Japan manufacturers can lead the global automotive industry.
Reporter
of the Ministry of Economic Affairs Akira
Tai Entered the Bureau
in 2013 in charge of the automobile and steel industry
Reporter
of the Ministry of Economic AffairsTsutomu
Yamane, who joined the bureau
in 2007 in charge of the automotive industry
Economic Affairs Reporter
Enoshima Airi joined the Bureau
in
2017 in charge of the automotive industry
Reporter
of the General Bureau of ChinaRyoto
Iga joined the Sendai Bureau
Okinawa Bureau Economic Department in 2006 and is currently affiliated