Japanese automotive majors Nissan (OTC:NSANF) and Honda (NYSE:HMC) are considering reducing their production capacity in China, as reported by Nikkei Asia. The development arises as Japanese automakers face stiff competition from their Chinese counterparts.
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According to Nikkei Asia, Nissan plans to enter discussions with its local joint venture company to potentially cut capacity by up to 30%, giving its current annual capacity in China of nearly 1.6 million units. The company intends to redirect some of this capacity in some of its China plants towards exports to other Asian markets.
Honda is also looking to reduce its China capacity by 20%, with its current annual capacity in China via two joint ventures standing at about 1.49 million units. As per Nikkei Asia, the company has already informed its suppliers about its production reduction plans.
Japanese auto companies have long been dominant in the Chinese auto market. However, Chinese manufacturers like XPeng (NYSE:XPEV), Li Auto (NASDAQ:LI), and BYD (OTC:BYDDF) have been steadily increasing their sales in recent years. The fierce competition in the industry has also impacted names such as NIO (NYSE:NIO), while even Tesla (NASDAQ:TSLA) experienced a sales decline in China last month.
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