Japan loses ground in China as electrification takes hold

Japanese OEMs’ sluggish progress in the electric vehicle market could damage their long-term sales prospects in China. By Will Girling

On 5 July 2023, global consulting firm AlixPartners forecast that domestic OEMs would secure more than 50% of China’s total car sales by the year’s end. This would represent a historic first in a national industry previously dominated by foreign brands, particularly from Japan.

“Japanese OEMs have lost their competitive edge in China. Their market share in the country is down from 23.6% in 2020 to 15.2% in 2023 and continues to drop,” says Tommy Shiekman, Automotive Specialist at Intralink—a consultancy that specialises in helping companies expand in the Asia-Pacific region. Indeed, there are already signs of strain for Japan’s largest automaker, Toyota. The company, which has been locked in a price war started by Tesla since January 2023, prematurely terminated the contracts of 1,000 workers at a factory in Guangzhou in July.