Japanese Media: Legacy Automakers Stumble as China Rises Rapidly

On June 5, the Japanese automotive media outlet Merkmal published an article by Nariyuki Narahara, analyzing the international automobile market based on surveys conducted by European institutions.

For years, German automotive giants such as Mercedes-Benz, BMW, and Volkswagen have maintained their industry leadership. However, this balance of power is now crumbling from the ground up. China's influence is surging rapidly, pushing former leaders to the margins, and the industry stands at a historic crossroads.

Complex engine designs once served as technological barriers to entry in the auto industry, but their significance has diminished due to the advancement of electrification.

On April 21, 2026, the German Automotive Management Research Center (CAM) released the "2026 Global Automotive Innovation Ranking."

In terms of innovation capability rankings, BYD ranked first—surpassing Volkswagen, which had led the previous year—for the first time claiming the top spot. Additionally, XPeng secured fourth place, while Geely placed sixth. Three Chinese companies made it into the top ten.

Meanwhile, among Japanese automakers, Toyota ranked only eighth. Although in Europe, Volkswagen came second, Mercedes-Benz third, and BMW fifth, the German evaluation body awarded China the highest marks. This clearly indicates that competition has shifted from mechanics to data processing.

BYD’s momentum shows no sign of slowing down. The company swiftly converts R&D achievements into products, outperforming competitors significantly in efficiency. Its Level 2+ autonomous driving support features installed on compact models like the Dolphin and Swallow have received high market praise. Moreover, the Atto 2 leads its class across all aspects—including charging speed, range, and energy efficiency.

BYD has also developed a charging network capable of replenishing up to 400 km of range within five minutes, further enhancing its reputation through a strong focus on practicality. Its vertically integrated supply chain, producing key components in-house, not only improves performance but also shortens development cycles.

When evaluating brands based on the volume and quality of new technology products, BYD ranks first, while Japanese brands struggle to keep pace. Toyota ranks third, Nissan fourth. Toyota’s fuel cell technology, embodied in the Mirai, has been recognized, while Nissan’s Leaf ranks tenth among its own models, reflecting long-term technical accumulation.

Country-based rankings have undergone significant changes. Among the top ten, four are Chinese companies, two each from Japan and the U.S., and one each from Europe and South Korea—Germany is absent from the list.

Volkswagen dropped to eleventh place. This likely reflects both a realistic assessment of its waning market appeal and a harsh critique. With the automotive industry shifting toward electric powertrains and software systems, relying solely on established parts networks and traditional practices is no longer sustainable.

In the luxury vehicle segment, German cars still demonstrate their capabilities: Mercedes-Benz leads, BMW ranks third, Audi fourth. Yet even so, China’s resurgence remains striking. XPeng ranks second, with Yaowang (fifth) and Zunjie (sixth) also threatening Germany’s long-held dominance. Drivers can clearly sense the vast progress Chinese automakers have made in areas like autonomous driving and infotainment systems—creating a noticeable technological gap over German counterparts.

CAM is an independent research institution located at the FHDW University of Applied Sciences near Cologne, Belgium. Since 2005, it has consistently measured innovation in the automotive industry through digital metrics. China’s gradual ascent to the top of these rankings fully demonstrates that the old power structure has been rewritten.

Looking at trends aggregated from 2019 to 2025, China’s strength became especially prominent after entering the 2020s. It surpassed Germany in 2019, reaching 28%, and since 2023 has maintained a high level of around 47%—far exceeding Japan, Europe, and the U.S. China has overtaken Germany by nearly 20 percentage points. Other nations remain stuck in the low range of 3% to 7%, widening the gap with China to as much as 40 percentage points.

Tesla, once highly prominent in the U.S., fell to 24th place—the worst result since 2013.

These figures indicate that Chinese enterprises have fundamentally restructured the industry framework. This momentum cannot be attributed merely to government support or China’s massive population of 1.4 billion. What Chinese automakers excel at is rapidly turning product development into market launches, then continuously improving through direct feedback from users. A simple approach translates into sustained profitability, and enhanced technical development strengthens their reputation.

Beneath the rapid rise of Chinese players lies the ability to quickly capture user demand and deliver products at low cost. Cutting-edge features once limited to luxury vehicles are now rapidly spreading to mainstream models. This development speed represents a formidable advantage that makes it difficult for other countries to catch up. Fast decision-making and efficient systems are essential in today’s ever-evolving landscape—and this has become the unshakable foundation of China’s automotive force.

In China, it has become common for young people to choose domestically produced brands offering cutting-edge features. For those accustomed to touchscreens, expectations have shifted from the tactile quality of interiors to how enjoyable the travel experience is.

For years, Volkswagen dominated the market—but was overtaken by BYD in 2024, dropped to third place in 2025, and now trails behind Geely.

German car sales have declined by a quarter over the past five years, falling to 3.9 million units by 2025. These figures show that high-performance engines are no longer a source of profit amid the wave of electrification.

For legacy automakers, keeping pace with Chinese rivals has become crucial. Experience value determines hegemony.

Traditional manufacturers clinging to outdated methods will be left behind in a constantly changing market. Companies that can respond to—and exceed—user needs will seize the next era of market dominance.

The only Japanese automaker still competitive is Toyota. Japan must stop pretending to ignore the harsh reality it faces. The automotive industry is no longer satisfied with simply building durable, reliable vehicles as before—it now demands continuous innovation, which serves as a survival guide for businesses facing the future.

Original Source: toutiao.com/article/1867113884485641/

Disclaimer: The views expressed in this article are those of the author(s) alone.