Nissan Motor has shuttered its newest assembly plant in China, the latest setback for Japanese automakers in an increasingly competitive market. The Changzhou plant, Nissan’s smallest but most advanced facility in China, ceased operations on Friday. This follows Honda Motor’s recent decision to scale down its workforce in the country as Japanese vehicle sales drop by 20% from their 2020 peak.
Nissan and its peers have been producing cars in China since 2000 through local joint ventures, with Nissan leading in production volume over Toyota and Honda for a decade until 2018. The Changzhou plant, which began production in November 2020, was initially expected to further boost sales in what was then Nissan’s largest market.
However, a fierce price war initiated by Chinese competitors, particularly BYD, has severely impacted Japanese automakers. In February, BYD slashed the price of its Qin Plus plug-in hybrid by 20,000 yuan ($10,990), directly challenging Nissan’s Sylphy, which starts at over 100,000 yuan. Nissan President Makoto Uchida acknowledged the unexpected early onset of this price competition when presenting the company’s new business plan in March.
Nissan’s sales in China fell 16% to 790,000 vehicles last year, marking the fifth consecutive year of decline. Toyota’s sales dropped 10% to 630,000 vehicles for January-May 2024, while Honda’s volume decreased by 17% to 340,000.
Japanese automakers have lagged behind their Chinese counterparts in the electric vehicle (EV) sector, which now accounts for 39.5% of new vehicle sales in China as of May, up 9.4 percentage points from the previous year. Sales of traditional internal combustion engine vehicles dropped 24.5% to 860,000 units, while new energy vehicles (NEVs) surged by 40% to 815,000 units.
Honda aims to transition all its new vehicle sales in China to electric models by 2035. Meanwhile, Nissan is betting on models like its Ariya sport utility vehicle to boost Chinese sales by 200,000 units by the fiscal year ending March 2027.
As the competition intensifies, Japanese automakers are grappling with the challenge of adapting to the rapidly evolving market dynamics driven by Chinese manufacturers’ aggressive pricing and advanced EV offerings.
