A reminder to domestic brands obsessed with price wars: Japanese brands are preparing for a big move by cutting fuel prices while building factories

In the past two years, sales of Japanese cars in China have been declining. Mitsubishi has withdrawn from the Chinese market, and Subaru and Mazda are on the verge of death. By 2024, even big brother Toyota can't hold on. In the first half of this year, sales of the three Japanese giants in China, led by Toyota, have collectively fallen.

The ice is three feet thick, and it didn’t freeze overnight. In a market where the penetration rate of new energy vehicles exceeds 40%, if fuel vehicles are still pushed hard, sales will inevitably decline. The three Japanese giants are not unaware of the general trend, but because of some inherent arrogance, they are still slow, and it seems that they can no longer keep up with the progress of the Chinese auto market.

Transformation is not easy. Even individuals may not be able to adapt and succeed when changing jobs, let alone a large enterprise. Among the three slow-moving Japanese automakers, Honda is the first to jump out of the obsession with fuel vehicles.

Clean the house before entertaining guests. This saying is very appropriate for Honda's recent actions. Honda recently announced that it will transform two of its seven fuel vehicle factories in China - Guangzhou and Wuhan. The 500,000 vehicle production capacity released by these two factories will all be transformed into new energy vehicles.

After the adjustment, Honda's fuel vehicle production capacity in China is only 1 million. Cutting so much may seem exaggerated, but it is actually conservative, because even 1 million is excessive. In the first six months of this year, Honda's sales in China were only 415,906 vehicles, and the full-year sales are expected to be between 800,000 and 900,000.

The situation of other Japanese manufacturers is not much better.

As early as November last year, FAW Toyota decided to significantly cut production, and the TEDA factory began a long vacation, and the annual production capacity was only one-third of that in 2022.

Nissan is also the same. Last month, it announced a 10% reduction in production capacity in China and the closure of its Changzhou plant with an annual production capacity of 130,000 units. As the weakest of the three major Japanese automakers, Nissan is facing tremendous pressure to survive.

The production capacity adjustment of Japanese cars in China is comprehensive and not just in the field of passenger cars. Shanghai Hino Engine will be liquidated next year. The company was established in 2003 and mainly supplies commercial engines. It once occupied an important position in the Chinese market, but now it has to leave sadly.

Obviously, it is impossible for Japanese cars to make a comeback in China by relying solely on fuel vehicles, as the market foundation no longer exists. The only way out is to focus on new energy.

In fact, Japanese manufacturers are not very willing to develop new energy. Toyota has led more than one "frustrated alliance" boycott of electric vehicles in Japan. However, facing the world's largest market, they cannot give up. It is precisely in the contradictions and entanglements that Japanese cars, which always thought they would last forever, have fallen behind.

In addition to Honda's old plant renovation and upgrading plan, Toyota has also taken similar actions. It is widely rumored in the market that Toyota is preparing to follow Tesla's model and build a wholly-owned Lexus factory in Shanghai, focusing on hybrid and pure electric models. If this plan is approved, it may greatly enhance Toyota's voice in China's new energy market.

Not only that, Toyota is also willing to break the rules for electric vehicles. In August last year, Toyota's largest R&D base in China, "Toyota Motor Research and Development Center (China) Co., Ltd.", was renamed "Toyota Intelligent Electric Vehicle Research and Development Center (China) Co., Ltd." and a large number of local Chinese talents were employed.

We cannot underestimate any mainstream foreign brand, especially Japanese brands. Once they are really ready for transformation, their strength should not be underestimated.

Take Toyota as an example. It is the pioneer of new energy vehicles in the world. As early as the oil crisis in the 1970s and 1980s, it began to look for alternatives to traditional fuel vehicles and has accumulated a lot of technology in the field of new energy vehicles.

Toyota's current poor performance in the Chinese auto market is due to its arrogance and failure to grasp the trend of the Chinese auto market. Its technology is not necessarily much worse than that of domestic manufacturers, it just lost the initiative for a certain period of time.

In 2023, Toyota's global sales exceeded 10 million vehicles, and its net profit reached 34.197 billion US dollars. In contrast, BYD, the current king of the global new energy vehicle market, had a net profit of only 30 billion yuan in 2023, and the gap between the two is very obvious.

If Toyota relies on its strong financial resources to increase independent research and development in the field of electric vehicles and is willing to bear losses in the short term to launch some high-performance new energy vehicle models, it is entirely possible for it to make a comeback in the Chinese market.

The fact that Japanese manufacturers are building new energy factories in China shows that they have truly come to their senses.

Building factories in China means that they can directly enjoy the world's most mature new energy supply chain and the most generous support policies. At the same time, they have influence that exceeds that of ordinary domestic brands. Once they come up with 1-2 popular models, they are likely to regain their foothold in the market.

At present, many domestic brands are still obsessed with involutionary price wars, which will greatly slow down the progress of independent research and development. At the same time, among domestic new energy manufacturers, only BYD, Ideal, and Seres have achieved small-scale profits, while the rest have been making losses for many years and are likely to lose their dominant position due to lack of "stamina".

It has only been three or four years since Chinese new energy brands have truly established their market dominance, and their dominance is not yet stable. So it is hard to say that the overall situation has been determined. For the market, this is a marathon-style competition, not a fleeting 110-meter hurdle.

As for which car will win in the competition between Japanese cars and domestic cars in the new energy market, the key lies in their respective determination and execution.

Japanese manufacturers are busy restructuring their business in China, shifting funds, production capacity and talent to the new energy track. If they really put down their airs and continue to invest, and "hold back" a few popular models, the future outcome will be very different. You know, what Chinese manufacturers can do, Japanese manufacturers can also do, and don't forget that BYD also took the path of learning from Toyota step by step.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.