Nissan, Honda plan production cuts in China amid rising competition

Japanese automakers Nissan and Honda are reportedly contemplating production cuts in China as they face intensified competition from local electric vehicle manufacturers like BYD, according to the Nikkei newspaper's report on Tuesday.

Nissan is considering slashing its annual production in the world's largest auto market by up to 30 per cent, equivalent to about 500,000 cars, while Honda is contemplating a 20 per cent reduction to around 1.2 million vehicles, Nikkei stated.

Both Nissan and Honda refrained from confirming the specifics mentioned in the report. A Nissan spokesperson dismissed the contents of the report, while Honda declined to comment further on its production plans.

Nissan is said to be restructuring its production facilities in collaboration with Chinese partners and exploring options to utilize excess capacity for exporting vehicles to other Asian countries, as per Nikkei's report.

Last year, Nissan's sales in China, the third-largest automaker by volume in Japan, witnessed a 16.1 per cent decline to less than 800,000 vehicles. Similarly, Honda, Japan's largest carmaker after Toyota, experienced a roughly 10 per cent drop in sales in China to 1.2 million vehicles during the same period.

The rapid growth of Chinese automotive brands has led to a loss of market share for foreign competitors in China.

Nissan operates eight factories in China through a joint venture with Dongfeng Motor, while Honda operates four factories through a JV with GAC Group and three additional factories through another JV with Dongfeng.

Details from Dongfeng and GAC Group regarding the potential production cuts were not immediately available.

Last November, Nissan announced plans to commence exports of cars from China to other overseas markets starting next year, targeting initial annual volumes of 100,000 to 200,000 units.

Nissan's CFO, Stephen Ma, acknowledged last month that the company had scaled back its sales forecast due to its performance in China.

(With Reuters inputs)