Japanese brands make pledge

Japan’s biggest carmakers have pledged co-operation in technology-focused areas to survive in the rapidly evolving global industry.

The news come with talks under way between Nissan and Honda that would effectively split the country’s industry in two. Mitsubishi could make it a three-way merger if it joins them.

Over the next decade, manufacturers will need to pool resources and collaborate in areas such as EVs and artificial intelligence to catch up with the technologically sophisticated cars available in other markets, reports the Japan Automobile Manufacturers’ Association (JAMA) in its road map for 2035.

The call to action comes at a crunch time for the industry. Honda has just announced a deal that would see it fold Nissan into its business in a tie-up that would pit the two brands against Toyota and its partnerships with Mazda, Subaru and Suzuki.

While that deal would carve up the domestic sector, Japan’s carmakers say they are united in their struggle to regain ground lost to products that have turned China into a global EV superpower.

“Japan’s car industry was once a global leader, but new technology and geopolitical instability have weakened its competitive advantage,” says JAMA.

In China, the world’s largest car market, Japanese marques are fighting for survival.

And a wave of Chinese EVs is starting to claim a growing share of south-east Asia, which has long been considered a stronghold for Japan’s legacy brands.

That said, there are some bright spots for Japanese companies. For example, Toyota has been a major beneficiary of a jump in demand for hybrids in North America. 

But rapid shifts in consumer preferences globally have created a vast gap between Japanese models and pure-electric brands, such as BYD and Tesla. At the same time, the industry is being buffeted by rising trade tensions worldwide. 

Tariffs on Chinese EVs imported to the US, and the potential for duties on goods from Mexico and Canada, could force carmakers to adjust their plans for North America.

Nissan’s struggles have showcased the difficulties faced by Japanese carmakers. In the weeks leading up to the announcement of its deal with Honda, it slashed jobs and production, reported a massive drop in profit and overhauled its executive bench. 

The partnership that’s set to bring the two brands under a single holding company is expected to list on the Tokyo Stock Exchange by August 2026. A decision about Mitsubishi joining Honda and Nissan is expected by the end of January.