Japanese automakers are losing ground in China’s highly competitive auto market, with vehicle production falling 63% in six years to its lowest level in nearly two decades. Toyota, Honda, Nissan and Mazda are facing mounting challenges as changing consumer preferences and growing demand for electric vehicles reshape the world’s largest new-car market.
Japanese Automakers’ China Production Falls to 18-Year Low
Toyota, Honda, Nissan and Mazda produced 2.8 million vehicles in China between April and September 2020, during the first half of Japan’s fiscal year. During the same period in 2026, their combined production barely exceeded 1 million vehicles.
The decline represents a 63% drop in six years, bringing Japanese automakers’ production in China to its lowest level for the April-September period since 2008.
Honda experienced the steepest decline compared with its 2020 production levels. The automaker produced 131,716 vehicles during the period, down 60% year over year and 90% from its peak in 2020.
Nissan production fell 49% year over year to 163,192 vehicles, leaving it 80% below its 2020 peak.
Toyota remained the largest producer among the four Japanese brands, building 663,079 vehicles. However, that total was 23% below its 2020 level.
Mazda was the only automaker to report an annual production increase, with output rising 43% compared with the same period last year. Even so, its production remained 52% below its 2020 level.
Electric Vehicle Competition Adds to the Pressure
Toyota’s year-over-year production decline of 18% was smaller than the broader Chinese market’s downturn. China’s new-car market has fallen 22% year to date, with economic conditions and changes to incentives for electric vehicles and plug-in hybrid models contributing to the slowdown.
The shift toward electric vehicles is creating additional challenges for Japanese automakers. Rising gasoline prices have pushed sales of traditional cars and trucks down 30% in China during the first nine months of 2026.
Honda, Nissan, Mazda and Toyota remain heavily dependent on conventional vehicles and have struggled to compete in China’s electric vehicle market, with some automakers having largely avoided the segment.
Honda sold just 2,991 electric vehicles in China between April and September. The company has also postponed its new flagship EV, which may not launch after acknowledging it could not compete.
Japanese Automakers Remain Dependent on China
Despite declining production and sales, the four automakers are unlikely to abandon China, which remains a major market for their businesses.
China accounted for 17% of Toyota’s sales in the previous fiscal year, 18% of Honda’s and 21% of Nissan’s. It was the second-largest market for all three companies, behind the United States.
To keep factories operating, the automakers are increasingly looking to export vehicles from China to other markets.
Nissan plans to send Frontier Pro PHEV pickups to South America, while Mazda is increasing exports of electric vehicles to Europe.
Global Automakers Face Similar Challenges in China
Japanese brands are not alone in struggling to maintain their positions in China. BMW’s recent performance has weakened, while Porsche has experienced a sharp sales decline.
Audi has responded by launching a new brand specifically for the Chinese market in an effort to expand its share.
General Motors’ market share in China fell 6.9% in the first half of 2026. Its joint venture, Changan Ford, has also seen sales decline significantly, dropping from 957,500 vehicles in 2016 to 247,000 in 2024 and fewer than 100,000 last year.
The production figures underscore the growing pressure on established automakers in China, where Japanese brands are confronting weaker demand for traditional vehicles and increasing difficulty competing in the electric vehicle segment.
