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Japanese manufacturers are having a hard time in the Chinese market, and this difficult situation is reflected incisively and vividly in the financial results.

Last week, seven major Japanese automakers reported results for the first half of fiscal year 2025 (April 2024-September 2024), with net profits of Toyota, Honda, Nissan, Mitsubishi and Mazda all down from a year earlier, according to CCTV financial reports. Nissan, in particular, posted a net profit of only 19.2 billion yen, down 94 percent from a year earlier.

According to Nissan, operating income in the first half of 2025 was 5.98 trillion yen, down 1.3% from the same period last year; operating profit was 32.908 billion yen, down 90.2% from the same period last year; net profit was only 19.223 billion yen, down 93.5% from the same period last year; operating profit margin was only 0.5%, compared with 5.6% in the same period.

Nissan's half-yearly results are so extended because of the second quarter (July 2024-September 2024). The results showed that Nissan's sales in the second quarter were 2.99 trillion yen, compared with 3.14 trillion yen in the same period; the net loss was 9.34 billion yen, compared with 190.7 billion yen in the same period; and the operating profit was 31.91 billion yen, compared with 208.1 billion yen in the same period.

Nissan's poor earnings performance has something to do with the decline in its sales in China. As of October 2024, Nissan's cumulative sales in China, including passenger vehicles and light commercial vehicles, were 558200 vehicles, down 9.98 per cent from a year earlier. Based on Nissan's market performance, Nissan announced that it would lower its operating profit forecast for the current fiscal year to 150 billion yen from 500 billion yen, and net sales to 12.7 trillion yen from 14 trillion yen.

Under the dual pressure of increasing competition in the global car market and declining sales, Nissan is taking urgent measures to reverse its performance, including reducing global production capacity by 20 per cent and cutting 9000 jobs worldwide. Nissan CEO Makoto Uchida announced that he would voluntarily give up 50% of his monthly salary from this month, and other executive committee members would voluntarily cut their salaries accordingly. In addition, Nissan will reduce its stake in Mitsubishi to 24% from the current 34% to strengthen the company's available funds.

Honda and Toyota, by contrast, are better off. According to the financial report, Honda's revenue in the first half of 2025 increased by 12.4% year-on-year to 10.7976 trillion yen, operating profit increased by 6.6% to 742.6 billion yen, pre-tax profit decreased by 15.6% to 741.9 billion yen, and operating profit margin fell to 6.9% from 7.2% in the same period. Although Honda's performance fell short of analysts' expectations, Honda raised its full-year revenue forecast. Honda expects revenue in fiscal year 2025 (April 2024 to March 2025) to rise 2.8 per cent to 21 trillion yen from the previous fiscal year. Operating profit will also rise 2.8 per cent to 1.42 trillion yen from a year earlier, while pre-tax profit will fall 12.6 per cent to 1.435 trillion yen. During the reporting period, Honda sales increased in Japan and the United States, but in the Chinese market, sales fell sharply with the winding of the new energy car race track and the increasingly fierce price war.

Toyota is the most profitable car company in the world, but it also faces a lot of challenges. In the first half of the fiscal year, Toyota's operating income was 2.328 billion yen, up 5.9% from a year earlier; operating profit was 2.46 trillion yen, down 3.7% from a year earlier; and net profit was 1.9 trillion yen, down 26.4% from a year earlier. However, Toyota also encountered a lot of challenges in the second fiscal quarter. Its operating income in the second quarter was 11.44 trillion yen, almost the same as that of the same period, but its operating profit fell 20% year-on-year to only 1.16 trillion yen, and its net profit was directly halved to 573.7 billion yen, compared with 1.28 trillion yen in the same period.

As for why Toyota's profits have fallen sharply, it is mainly because of counterfeiting. In May this year, Japan's Ministry of Land and Transport issued a notice informing five Japanese companies, including Toyota Motor, of fraud. Toyota has suspended production of fraudulent models, including the Corolla Fielder, Corolla Axio and Yaris Cross, since June 6, and Toyota has had to pay billions of dollars to stop production.

At the same time, as one of the most important markets in the world, Toyota's life in the Chinese market is becoming more and more difficult. The penetration rate of domestic new energy vehicles is increasing rapidly, while the market size of traditional fuel vehicles is gradually shrinking. With the decline of fuel model sales, Toyota, which relies on fuel vehicles to drive sales, has encountered a cold winter in China. Toyota plans to increase production in China to meet its target of producing at least 2.5 million and up to 3 million vehicles a year by 2030, in a move aimed at better competing with Chinese electric carmakers, according to foreign media reports.

In addition to the Japanese Big three, Mazda and Mitsubishi Motors also declined. In the first half of 2025, Mitsubishi Motors' operating income was 679.9 billion yen, down slightly from 695 billion yen in the same period last year; operating profit fell 6.4 per cent to 55.2 billion yen; and net profit was 8.5 billion yen, compared with 19.6 billion yen in the same period last year.

One of the most important markets for Japanese automakers in the Chinese market. At present, Honda and Nissan have the embarrassing situation that "fuel cars are difficult to sell and electric vehicles are not hot" in the Chinese market, while Toyota can still support it, but it is also under growth pressure in the face of the surge of new energy vehicles. As for Mazda and Mitsubishi, Mitsubishi's joint venture brand with Guangzhou Automobile has withdrawn from China. Earlier, Nissan CEO Makoto Uchida said in an interview that Chinese carmakers were "getting stronger" and that Nissan was caught in a "survival game" in the Chinese market. If Nissan continues to do things the way it used to do, Nissan has little chance of survival. Nissan is committed to staying in China and is planning to work with local companies to remain competitive.

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