Nissan and Honda join forces to battle Chinese competition

Nissan and Honda are preparing to reduce their production capacities in China significantly. The two  Japanese car manufacturers are finding it difficult to keep up with Chinese competitors in the race for electric cars. A solution could be to join forces and slash EV prices consequently.

As Nikkei Asia reported, both manufacturers plan to reduce production capacities by up to 30% (Nissan) and 20% (Honda) in their respective Chinese joint ventures. However, there is no mention of a change in the majority structure of the respective joint ventures. It is only about production capacities, not about a (partial) sale of shares.

Honda’s sales in China account for more than 30% of its total sales, while Toyota and Nissan’s sales in China amount to more than 20% of their total sales. Around 10% to 20% of the net profit of Japanese automakers overall comes from operations in China.


Nissan currently holds a 50/50 joint venture called Dongfeng Motor Company Limited with the Dongfeng Motor Group. To avoid any confusion with the Chinese manufacturer, the joint venture itself is softly referred to as Dongfeng-Nissan.

Through the joint venture, the Japanese can currently build around 1.6 million cars per year in China. If this capacity were to be reduced by 30%, this would equate to around 500,000 fewer cars.

However, Nissan has not even utilized this capacity recently. In 2023, only 793,000 vehicles were built in China, a decrease of 24% compared to 2022. Previously, Dongfeng-Nissan had consistently produced over one million units for more than a decade.

Specifically, eight factories are to be restructured, and some plants, which have so far served the meager domestic demand, will produce for export in the future. At least, this is how sources from the Japanese business newspaper Nikkei describe the plans, which have not yet been officially confirmed.


Honda also chose Dongfeng as a joint venture partner in 2003. The joint venture founded in 2003 is called Dongfeng Honda Automobile Company. There is also a joint venture with the GAC Group called GAC Honda Automobile.

Honda currently has a production capacity of 1.49 million vehicles per year in its Chinese factories. This figure is to be reduced to 1.2 million units in the future. According to Nikkei, Honda is in talks with local partners and has already informed the most important suppliers that production will be reduced.

Japanese manufacturers first became active in China more than 20 years ago through joint ventures and have celebrated some successes there. However, the focus of Chinese industry and consumers has recently shifted to local Chinese brands.

Teaming up

In 2023, Chinese manufacturers had a market share of 56%. When it comes to so-called new energy vehicles (NEVs), Chinese brands are also leading the way, not joint ventures. As a result, not only Japanese companies but also South Korean and German brands have recently come under pressure in China. The market leader is no longer Volkswagen but BYD.

That’s why Nissan and Honda are considering teaming up to introduce more affordable EVs to compete with Chinese automakers like BYD. The partnership could include a new EV platform.

According to Nikkei, Nissan may take the plunge as it weighs a partnership with Honda to develop more affordable EV tech. Sources at Nissan said the automaker may discuss joint battery and vehicle development with Honda. Nissan looks to move to a common EV powertrain, which the two could partner up on purchasing. Another possibility is jointly designing and developing a shared EV platform.

The aim is to significantly reduce EV prices as automakers look to Chinese automakers with low-cost models like BYD. The latter has a significant advantage by building nearly all vehicle parts in-house. The Chinese EV leader declared a ‘liberation battle’ against ICE vehicles by slashing EV prices and introducing electric cars with prices as low as $9,700 (69,800 yuan) in China.

Catching up?

Once viewed as an EV pioneer with the launch of the Leaf model in 2010, Nissan is now falling behind the market. Following a bumpy start, Nissan Ariya production is finally running smoothly.

All Japanese car manufacturers, including Nissan, Honda, and Toyota, are falling behind in the EV market due to a slow shift from hybrids. These automakers are now looking to prevent falling further behind, promising to release next-gen EV tech to cut costs and improve competitiveness.

However, Honda has already scrapped plans to build affordable EVs with GM, citing a “changing business environment.” CEO Toshihiro Mibe in an interview with Bloomberg TV: “After studying this for a year, we decided that this would be difficult as a business, so at the moment we are ending development of an affordable EV.”

Will a partnership with Nissan to lower EV prices be any different? More details will likely surface soon, and then we will see if the plans are going to materialize and if Japanese manufacturers can catch up with the electric disadvantage they’ve built up in recent years.


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