Japanese car manufacturers are seeing their sales tumble in China as the nation continues its rapid adoption of electric vehicles, many of which are being built by local companies. 

Industry data has revealed that total sales of Japanese auto brands in China fell 32% year-on-year in the first quarter of 2023. Japanese firms now account for 18% of China’s new vehicle sales, down from the 20% share of 2022, the 22% share of 2021, and the 24% share of the market that they had in 2020. 

Some carmakers are being hit particularly badly. Mitsubishi recently announced that it has suspended production of the Outlander in China for three months and is taking a one-time hit of $78 million for its slow sales in the country. Additionally, Nissan posted a 45.8% drop in Chinese sales in the first quarter of 2023 while those from Honda fell by 38.2% and those at Mazda plummeted by 66.5%. Toyota and Lexus posted a sales decline of 14.5%. 

Speaking with Reuters, Honda chief executive Toshihiro Mibe noted that its Chinese rivals was beating it in certain software technologies, explaining that China’s carmakers are “further ahead of us than we expected.” 

In general, Japanese car manufacturers have been slow to adopt electric and plug-in hybrid powertrains when compared to some of their Chinese rivals. The country is shifting to electrified vehicles so quickly that the Nissan Sylphy which was China’s top-selling vehicle for three years was beaten out by the plug-in hybrid BYD Song last year.