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Japan’s Nissan Motor Co Ltd (OTC:NSANY) and Honda Motor Co Ltd (NYSE:HMC) reportedly mull over reducing production in China amid heightened competition from electric vehicle manufacturers like BYD Company (OTC:BYDDY).
Nissan contemplates scaling back production by about 30%, equivalent to roughly 500,000 cars annually, while Honda explores a potential 20% reduction to approximately 1.2 million vehicles, reported Reuters, citing the Nikkei newspaper.
Nissan is restructuring its production facilities with local partners in China, seeking to utilize excess capacity for exporting vehicles to other Asian countries, the report added.
Nissan recorded a 16.1% drop in sales in China last year, with Honda witnessing a 10% decline in vehicle sales over the same period.
The rise of Chinese brands has contributed to a loss of market share for foreign automakers operating in China.
The report noted Nissan, in partnership with Dongfeng Motor, operates eight factories in China, while Honda, through joint ventures with GAC Group and Dongfeng, manages a total of seven factories across the country.
Looking to diversify its market presence, Nissan recently reveled its plan to commence exports from China to other global markets starting next year.
Nissan’s CFO, Stephen Ma, reportedly acknowledged a revised sales forecast due to the company’s performance in China, indicating the pressure faced by Japanese automakers in the region.
Price Action: HMC shares are trading higher by 1.41% at $35.17 on the last check Tuesday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo by michelmond on Shutterstock
