A 94% drop, 9,000 layoffs! China’s automotive rival has collapsed. Financial Talk 2024/11/19 14:52 Financial Business Observer from Beijing. In the fierce competition of the global automotive industry, the profit myth of Japanese car manufacturers is gradually fading, reflecting the surging tide of the new energy era. The rise of Chinese new energy vehicles is quietly changing the landscape of the global automotive industry, and the continuous retreat of Japanese car manufacturers is a vivid portrayal of this transformation. Under the wave of new energy, the decline in profits of Japanese car manufacturers is not accidental, but rather an inevitable result of their hesitation and self-disruption in the face of new technologies and new markets. Author: Yang Rui Recently, Japanese car manufacturers released their financial reports for the first half of the fiscal year. Notably, the profits of five well-known Japanese car manufacturers have all declined, with Nissan, which has over 130,000 employees worldwide, suffering a staggering 94% drop in profits. ▲ Image source: China Youth Network Once, Japanese cars had a stable market globally and never worried about sales. In just a few years, Japanese car manufacturers collectively descended from their pedestal, and the reasons behind the sharp drop in profits are worth examining. The rise of new energy electric vehicles is one of the important reasons for the dramatic decline in profits of Japanese car manufacturers. Facing fierce competition in the Chinese market, Japanese car manufacturers are retreating step by step. In 2020, the market share of Japanese cars in China exceeded 24%, but by 2024 it has fallen below 12%. Even more alarming is that, based on current trends, the market share of Japanese cars in China will continue to decline. On the other hand, BYD has become the leader in China's automotive industry. In October of this year, BYD's monthly sales exceeded 500,000 units, meaning that for every three new energy vehicles sold in China, one is BYD. It is not an exaggeration to say that most of the market share lost by Japanese car manufacturers in China has been taken by BYD. A 94% drop, 9,000 layoffs! Nissan's financial report for the first half of this year shows that the profits of five Japanese car manufacturers—Toyota, Honda, Nissan, Mitsubishi, and Mazda—have all declined. Among them, Toyota’s net profit dropped by 26.4%, while Nissan’s net profit plummeted by 94%. Why did Nissan’s profits plummet so drastically? Increased competition in the automotive market and declining sales in the Chinese market have led to a significant drop in Nissan's profits for the first half of the fiscal year. It is worth mentioning that this is the first time that Japan's largest car manufacturer, Toyota, has experienced a decline in profits for the first half of the fiscal year. Can all of this be blamed solely on the strengthening of Chinese cars? The strengthening of Chinese cars is just an external factor. The internal factors, such as Japanese car manufacturers’ self-disruption, fraud, and indecisiveness, have greatly accelerated the collapse of their profits. Not long ago, in June of this year, many Japanese car manufacturers, including Toyota, Mazda, and Nissan, were exposed for serious violations and fraudulent activities during the mass production certification application process. To reduce costs, some models from these Japanese car manufacturers submitted false data during certification testing. After the fraud scandal was exposed, these Japanese car manufacturers not only had to stop producing and selling the involved models but also had to spend heavily on rectification, which truly backfired. Instead of saving costs, they suffered a significant decline in sales and profits due to the negative news.
