Gasgoo Munich-Toyota, Honda, Nissan, and Mazda saw their combined output in China slump 32% year-on-year to 1.02 million units between April and September, hitting the lowest level for that period since 2008. Compared to the peak of roughly 2.8 million units in the same period of 2020, production by the four Japanese automakers has shed nearly 1.8 million units over six years—a decline of 63%.
Image Credit: Nissan
Honda posted the steepest decline, with production in China falling 60% to 131,716 units from April to September—a drop of roughly 90% from its 2020 peak. Recently, the company's monthly output in the country has hovered between 10,000 and 20,000 units, marking a year-on-year slide of about 70%.
Nissan' s output in China dropped 49% to 163,192 units during the same period, shrinking about 80% from its peak level. Toyota produced 663,079 vehicles, down 18% from a year earlier and 23% lower than the same period in 2020. Mazda, meanwhile, saw production climb 43%, though that remains 52% below its historical high.
From January to September, China's new vehicle market sales slipped 22%, weighed down by slowing economic growth and reduced subsidies for new-energy vehicles. At the same time, conflict in the Middle East drove up international oil prices, delivering a further shock to the auto market. Sales of non-new-energy vehicles fell more than 30% year-on-year, contracting about 60% compared to 2020 levels.
Japanese automakers remain heavily reliant on internal combustion engine models, including hybrids, leaving them exposed as the market for traditional fuel-powered vehicles contracts.
On the sales front, Honda' s China deliveries tumbled 48% to 161,372 units between April and September. Nissan' s sales slid 46% to 182,854 units over the same period, with demand for its flagship gasoline sedan, the Sylphy, weakening noticeably.
Japanese brands have also turned in a relatively lackluster performance in the electric vehicle market. As consumers shift away from gasoline cars toward electrics, Japanese automakers have failed to effectively expand their share in the pure battery EV segment.
Honda sold just 2,991 electric vehicles in China from April to September, a 62% plunge from the previous year. Crippled by sluggish demand, the company has indefinitely postponed the launch of its flagship electric model, the GT, which had originally been slated for release by December 2025.
Nissan's pure electric sedan N7, launched in April 2025, saw its sales in China slump 76% between April and September compared with the same period a year earlier. Despite a strong start, the buzz cycle for new models is shortening as a flood of new cars hits the market.
In the 2000s, Japanese automakers aggressively expanded capacity in China as the market boomed, elevating the country's importance to rival that of North America.
Since 2020, however, China's auto market has accelerated its transition to new-energy vehicles, and domestic players like BYD have emerged. As demand for traditional combustion engines continues to weaken, Japanese brands have seen their market share squeezed, with production in China falling back to levels not seen since before their massive expansion.
The retreat by Japanese automakers is rippling through the Japanese parts suppliers that followed them into China. On October 20, Koito Manufacturing announced it would dissolve a subsidiary producing automotive lighting equipment in the country.
Some Japanese suppliers are attempting to broaden cooperation with Chinese automakers, but they face intense price competition from domestic parts makers.
U.S. research firm Mobility Global forecasts that by 2030, the combined annual output of Toyota, Honda, Nissan, and Mazda in China will fall another 47% from 2025 levels, dropping to roughly 1.6 million units.
Even with the persistent headwinds, exiting China is not a realistic option for most Japanese automakers. In fiscal year 2025, China accounted for 17%, 18%, and 21% of global sales for Toyota, Honda, and Nissan respectively, making it the second-largest market for all three after the United States.
Moreover, China remains a critical battleground for advanced automotive technology, particularly in electrification and autonomous driving.
