Why did the sales of Japanese automakers in the Chinese market drop by more than 20 percent year-on-year?
Japanese and European automakers are facing increased pressure from Chinese brands due to a combination of factors including a faster transition to electric vehicles (EVs), strong domestic demand, and aggressive pricing strategies.
Chinese automotive brands have also benefited from government support for the EV industry, including subsidies and investment in research and development. Brands like BYD and Geely have worked with more internal and investor funds to move their game up further.
Although Toyota’s TNGA-based models have made some breakthroughs in design, and Lexus’s designs have also been modern and exciting, overall, Japanese cars’ bold innovation and personalized expression in design are still insufficient compared to some new forces and radical Chinese designs that are attracting new car buyers.
Consumers’ aesthetic tastes are changing, especially as Generation Z becomes the main force in car purchases, and they pursue uniqueness and trends. Not after sales!
Japanese cars used to have low configuration in the “basic version” models, and many practical and even core technology configurations only appeared in high-end more expensive models. This strategy seems to be lacking in the face of the current “entry-level high-end” Chinese models like the BYD Dolphin that carries nearly all the technology found in the BYD SEAL.
Consumers today for the same price can buy a Chinese made vehicle with better configuration and better experience, so why not?
One of the biggest reliances of Japanese cars was their strong brand halo and word-of-mouth effect. “Fuel-efficient and durable” and “high value retention rate” used to be their deeply rooted labels. Now, that has changed with Gen Z!
However, in the new energy era, the concept of “electricity is better than petrol” has gradually become popular, and pure electric vehicles and plug-in hybrid vehicles often have more advantages in terms of running costs, which makes the “fuel-efficient” label of Japanese fuel vehicles less attractive.
As for “durability”, although Japanese cars still have a good reputation in this regard, like with the Honda e:N1 with the overall progress of automobile manufacturing technology and the long-term development of Chinese brands in quality control, this advantage is no longer unique.
More importantly, for young Gen Z consumers who pursue fresh technological experiences, being too “durable” may even become an obstacle to changing cars. The once strong “value retention rate myth” has also begun to loosen with the intensification of market competition and the impact of new energy vehicles on the used car market.
Chinese brands and new forces such as Tesla have rapidly iterated on these new tracks, building new technical barriers. The early pure electric models launched by Japanese automakers (like the Toyota bZ4x) are still having no obvious advantages over their competitors in terms of battery life, intelligent experience, cost-effectiveness.
