Nissan And Honda Considering Cutting Back Production In China
Nissan and Honda reportedly planned this because of stiff competition from BYD
Japan’s Nissan Motor (Nissan) and Honda Motor (Honda), are reportedly considering cutting production in China as they face stiff competition from BYD and other electric vehicle makers, the Nikkei newspaper reported on Tuesday. If this is indeed true, then Japanese automakers may be forced to slash prices as well.
The running story right now is that Nissan may lower annual production in the world’s biggest auto market by as much as 30 percent, or about 500,000 cars, while Honda is looking at a 20 percent cut to around 1.2 million vehicles, Nikkei said. Considering the only other alternative would be a price war, this is a good call.
Moreover, a Nissan spokesperson said the contents of the report were not true without elaborating. A Honda spokesperson said it had not decided to reduce production to about 1.2 million vehicles in China, declining to comment further. This may not be the truth given how dominant BYD is in sales though.
Nissan is reorganising production bases with Chinese partners and seeking to use excess capacity to produce cars for export to other countries in Asia, Nikkei said. Sales of Nissan, which is Japan’s third-largest automaker by volume, dropped by 16.1 percent in China last year to less than 800,000 vehicles, company data showed.
Those of Honda, Japan’s biggest car maker after Toyota were also down about 10 percent in China to 1.2 million vehicles over that period, its data showed. The emergence of fast-growing Chinese brands has led foreign rivals to lose market share in China.
On top of that, Nissan operates eight factories in the country through a JV with Dongfeng Motor while Honda operates four factories in China through a JV with GAC Group that traces its roots to the late 1990s, and three other factories through another JV with Dongfeng it set up in 2004.
Nissan also said in November it will begin exporting cars from China to other overseas markets from next year, initially aiming for annual volumes of between 100,000 and 200,000 units. Nissan CFO Stephen Ma also said last month the company’s sales forecast was scaled back due to its performance in China.
In a sign of the pressure Japanese automakers have been under in China, smaller peer Mitsubishi decided last year to end production of its cars at its JV in the country. It is no secret that Chinese cars are becoming more and more desirable so perhaps Japan needs to think of an answer to China’s cheaper cars.
We got all this from Reuters and their full article is linked here. Thank you Reuters for the information and images.
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