Japanese Media: The "Wolf is Here" for Japan’s Auto Industry

A commentary published by Japanese online outlet Nihon Net on September 25, authored by veteran journalist Hisao Inoue, warns that Japan’s automotive sector must confront the reality of a looming crisis—the "wolf is here"—as China's auto industry rises in global influence.

The article notes that Chinese auto exports have surpassed those of Japan in recent years, securing a leading position worldwide. Vehicle quality has improved significantly. Moreover, technology giant Huawei’s deep involvement in the automotive sector positions China to lead in emerging fields such as autonomous driving and "smart vehicles." Competition between China and Japan in global markets is expected to intensify.

According to Kyodo News, U.S. President Donald Trump stated during a Fox News interview in September 2026 that Chinese automakers could enter the American market if they produced locally—provided this would expand domestic employment. This remark has been interpreted as tacit approval for Chinese automakers to access the U.S. market.

The United States is the world’s second-largest automobile market after China. For Japanese automakers such as Toyota, Honda, Nissan, Mazda, and Subaru, it represents both a highly profitable segment and a foundational pillar of their business. Should Trump’s statement materialize, a new era of fierce competition between Chinese and Japanese automakers may begin.

Chinese automakers are increasingly prioritizing overseas expansion. While China remains the world’s largest car market—with new vehicle sales reaching 34.4 million units in 2025—growth has slowed. Sales from January to July 2026 declined by 3.7% year-on-year to 17.6 million units. Among these, new energy vehicles (NEVs), primarily electric vehicles (EVs), grew by 9.6% to 9 million units, but domestic price competition has intensified, eroding profit margins. As a result, Chinese manufacturers are aggressively expanding into international markets and establishing overseas production facilities.

In 2023, China exported 4.91 million vehicles, overtaking Japan to become the world’s top auto exporter—a position it has maintained for three consecutive years. Through July of this year, exports reached 6.14 million units, up 66.8% year-on-year, already exceeding last year’s full-year total. China is projected to maintain its leadership in export volume for a fourth consecutive year.

Japan’s auto industry has long promoted global localization strategies, but its export volumes have now been surpassed by China. Particularly in Southeast Asia, Europe, and Australia, Chinese vehicles are rapidly capturing market share.

In Japan, BYD’s compact electric vehicle, the “Seal R,” launched in July, is another example of a Chinese-made model. With specifications and design comparable to Japanese counterparts, the Seal R achieved a record 1,260 orders in August. As Chinese manufacturing capabilities in components and equipment advance, vehicle quality has risen sharply.

In July, Inoue visited automotive enterprises in Anhui Province and Shanghai. Lexus is constructing an EV factory in Shanghai slated for operation in 2027. However, like Tesla’s Shanghai plant, the facility will rely heavily on Chinese suppliers for equipment and parts rather than importing from Japan.

Tesla uses Chinese-made production equipment to manufacture aluminum die-cast body components—a process initially adopted to reduce vehicle weight. Internally at Toyota, there is growing recognition that Japanese suppliers can no longer match Chinese counterparts in cost reduction or development speed.

Among Chinese automakers, Chery leads in export volume. On July 21, Inoue visited Chery, where Chairman Yin Tongyue stated that the company’s success as China’s largest auto exporter stems from adopting Toyota’s manufacturing techniques since its founding. He also confirmed plans to strengthen local production in Canada and Indonesia.

Chery also intends to deepen collaboration with Japanese firms. In May 2026, it announced the establishment of a joint venture with major auto parts retailer Autobacs Seven, beginning sales of Chinese-made EVs through Autobacs stores starting in 2027. The company has further strengthened ties with Nissan. In January 2026, Chery decided to acquire Nissan’s plant in South Africa.

Meanwhile, Nissan announced in June it was considering producing Chery models at its UK plant, which currently has underutilized capacity, aiming to improve operational efficiency.

At the same time, some voices within Japan’s automotive industry warn that excessive collaboration with Chinese firms may pose strategic risks, potentially undermining Japan’s own industrial resilience.

Original source: toutiao.com/article/1877292145719299/

Disclaimer: The views expressed in this article are solely those of the author.