Somewhere in the world, probably Beirut, Carlos Ghosn is having a severe case of sadness.
The Nissan-Motor-CEO-turned-international-fugitive is seeing stock plunge 47 % during the recent CEO’s five-year career. Makoto Uchida also lost more than 100 percent details to Japan’s Topix score. He’s then Nissan’s worst-performing president since at least 1974.
But Nissan’s slip isn’t happening in a suction, as Japan’s another engine giants can speak.
In 2019, the business was still reeling from Ghos n’s arrest on financial misconduct charges and escape. Nissan and its Japanese competitors are now facing a worldwide market shakeup caused by the growth of China.
Or, as Michael Dunne, CEO of automobile industry advice ZoZoGo, calls it, the “great China vehicle blitzkrieg”. According to Dunne,” the unexpected flood of Chinese cars is upending years of steady market securities and profits.”
As Donald Trump enters the White House to start off trade war, China Inc. is becoming even more of a goal. Chinese manufacturers are under increasing pressure due to a precise explosion in competition from China, particularly in the field of energy vehicles.
The Volt manufacturing acceleration process has been at best slower. Has Japan Inc. CEOs ‘ pressure on the nation’s long-dominant hybrid car market shifted to EVs and loosened their hand?
” China may export a spectacular 6 million vehicles to more than one hundred countries this month, cementing its status as the country’s No 1 producer”, Dunne says.
The typical price of those made-in-China cars: US$ 19, 000. ” That’s less than half the regular price of a new vehicle in America and Europe”, Dunne adds. Customers in all time zones are switching to new Chery, MG, Changan, and BYD models instead of Chevys, VWs, and Hondas.
If not for Trump’s returning to the scene 48 time from now, Chinese EVs eating Japan’s meal would be problems much. The US president-elect has hit the ground running by enacting transfer taxes on both China and Canada.
Trump’s inclusion of neighbors in his price list is shocking Tokyo and Seoul. One big concern is Trump’s plan to impose 100 % levies on vehicles made in Mexico ( and, presumably, on Canada too ).
As Trump results to business, his “revenge” journey is sure to start in Asia. That has leaders at Toyota, Honda, Nissan, Hyundai, Kia and some bracing to levies of similar scale heading Asia’s manner. Auto-production-heavy markets like Thailand also may be in harm’s way as global supply chains go astray.
Tesla businessman Elon Musk has Trump’s hearing as the next trade war develops, thinning the story. Earlier this year, Musk warned that Chinese Vehicle areas are destined to have” important” achievement outside China.
Musk claimed in January that” the Chinese auto companies are the most competitive car companies in the world.” According to the statement,” I believe they will have a major achievement outside of China depending on the establishment of taxes or trade barriers.”
But, he added, “frankly, I think, if there are no industry restrictions established, they will very much dismantle most various companies in the world”.
In the months that followed, Musk has attempted to refute those sentiments. Apparently, someone in the Shanghai place reminded Musk of Tesla’s sprawling manufacturing presence there, where he built his first outside” Plant”.
Musk’s close relationship with Trump — including a position as authorities efficiency advisor— muddies the issue. How Musk manages to compromise his position in Trump World with an economy that Tesla heavily relies on, one that Tesla relies on.
Some argue that Musk’s level – and position in Trump World – may help Tesla engage in China via-a-vis contemporaries.
Tesla “has the scale and scope that are unmatched in the EV industry, and this dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled with likely higher China tariffs that will continue to dethrone cheaper Chinese EV players ( BYD, Nio, etc. )” from flooding the U. S. business over the forthcoming times”, says Dan Ives, an analyst at Wedbush Securities.
There is nothing scientific about where all this leads, though, in Japan, where the country’s economy is still reeling from decades of excessive monetary easing.
Japanese Prime Minister Shigeru Ishiba has been frantically trying to meet with Trump since his shock victory on November 5. But to no cost. So much, Trump World has refused to grant Ishiba a Mar-a-Lago market.
Ishiba hopes that by forming a specific relationship with Trump, Japan Inc. will suffer less collateral harm. It’s what former Prime Minister Shinzo Abe did during Trump’s 2017-2021 president.
Abe became the first earth president to jump to Trump Tower in New York to love the ring in November 2016, just weeks after Trump’s victory in the election. But other than garnered worldwide headlines, the prank did little good.
Trump continued to withdraw from the Trans-Pacific Partnership, which was started by the US. Abe had pressed Trump to be on the TPP, which was the foundation of Tokyo’s efforts to encircle China.
Nor did Abe’s beauty offensive win Tokyo a slip on the Trump 1.0 taxes. Trump, however, palled around with Kim Jong Un in way that upheld North Korea’s brutal government at the cost of Japan’s national security. Trump humiliated Abe by revealing that the Chinese president had nominated him for the Nobel Peace Prize, adding insult to injury.
But there’s another reason Ishiba may perform Trump 2.0 quite carefully: the interpersonal US leader’s wish for a “grand bargain” with Xi.
Trump government takes, including Scott Bessent as US Treasury director, argue that this is the end game. Today’s risks of large tariffs, they argue, are only a negotiating strategy aimed at prodding Beijing to flex to US needs.
Japan’s issue is that it would be looking into any diplomatic Group of Two trade offer from the outside. Chinese EV industry would be the main beneficiaries of any such agreement.
That, of course, would be the same of President Joe Biden’s plan of shutting Chinese Vehicles out of the US business with 100 % fees.
Trump claimed on the campaign trail that “large companies are only being built across the border in Mexico” by China to make vehicles to offer in the US market. Our folks will man those flowers, and those plants will be constructed in the United States.
The vegetables Trump may employ to encourage China to construct US factories remain ambiguous. But the stick if China Inc doesn’t post could be 200 % tariffs, Trump has warned.
Where does this leave South Korea and Japan, in my opinion?
Now, it’s clear Foreign EV makers are on a break. By the time they were a month quick, BYD, Leapmotor, and Xiaomi already had their yearly delivery goals crossed. What’s more, BYD, Xpeng and Zeekr saw record quarterly sales in November.
BYD, for instance, delivered 504, 003 passenger cars in November and 500, 526 in October. Its full-year sales for passenger vehicles presently hit 3, 740, 930, exceeding the week’s 3.6 million goal.
Leapmotor, which is backed by Stellantis, saw 40, 169 deliveries in November, up 5.2 % from October and a whopping 117 % year on year. As competition in China heats up, Tesla has had to slash Model Y prices by 10, 000 yuan ( US$ 1, 371 ) to 239, 900 yuan ( US$ 32, 000 ).
At the moment, Chinese automakers are playing catch-up in the EV area and boosting purchases. That’s regardless of what becomes of Trump’s business conflict or his pledge to eliminate Biden’s$ 7, 500 return on EV payments.
Toyota, for instance, is building a great power shop in the US state of North Carolina”. We plan for the long term, but political considerations aren’t a factor in how we approach product creation or investment opportunities,” says David Christ, vice president of Toyota North America.
Yet Japan Inc. is bleeding global market share. A new analysis by Bloomberg economists found that Japanese automakers saw the biggest market share losses of any peers between 2019 and 2024 in China, Indonesia, Malaysia, Singapore and Thailand.
How China is gaining from those losses can be written in bold font between the lines. It’s likely they’ll strengthen that push,” says Bloomberg Intelligence senior auto analyst Tatsuo Yoshida of China’s ambitions.
Even the sales and output of the much-vaunted Toyota appears , to have plateaued. All six of the main Japanese automakers that Bloomberg Intelligence has tracked have consistently ceded ground. In Thailand and in Singapore, where Japanese carmakers long enjoyed strong customer loyalty, market shares are down to 35 % from 50%-plus in 2019.
In 2023, China dethroned Japan to become the world’s top automaker. The devastating blow to Japan’s collective psyche was the worst since China overtook Japan in terms of GDP in 2011.
However, the ways that Chinese automakers managed to capture Japan’s nap continue to surprise economic historians. It’s not just autos. Efforts to generate more tech” unicorns,” for example, didn’t gain the traction Japan’s government expected. Even today, Japan trails Indonesia in the race to generate US$ 1 billion-plus valuation startups.
As the EV market expanded, Japan’s persistent obsession with hybrid vehicles reflects this same pattern. Granted, the slowdown in US demand for EVs has many auto analysts believing Japan’s dual-track approach has merit. At least temporarily.
Yet Toyota officials and their Japanese counterparts are in fact aware of their errors when they dismiss the EV future as being in view. Toyota is catching up on older models. Japan’s top automaker is tripling EV output as it chases China’s BYD, which in 2023 surpassed Musk’s Tesla.
The question, of course, is whether it may already be too late as Tesla, Detroit, Germany and China beat Toyota to the market”. No one,” says advisory ZoZoGo’s Dunne”, can match BYD on price. Period. Boardrooms in America, Europe, Korea and Japan are in a state of shock.”
Of course, Trump’s trade war could complicate the outlook considerably. This is especially important because no one is sure whether Trump will strike a deal with Xi’s China or instead impose tariffs.
For now, Cigdem Cerit, an analyst at Fitch Ratings, sees a” neutral outlook for the global automotive sector, “reflecting” our expectation of a stable production environment, with global light vehicle sales projected to increase by about 2 %.”
But Cerit adds”, the growth will be unevenly distributed across regions, as European and Chinese markets face macroeconomic challenges. We expect pricing to remain subdued due to escalating competition.”
For Japanese chieftains like Nissan’s Uchida to those at Toyota, the threat from China’s auto industry isn’t to be taken lightly. Nor does the upcoming US government work with China Inc. or support its replacement.
Follow William Pesek on X at @WilliamPesek