Japanese automakers are attempting to make a comeback in China with their local joint venture partners and Chinese suppliers of smart cockpit and self-driving technology.
With their combined market share in China down from 24.1% in 2020 to 13.7% in 2024, according to the China Passenger Cars Association, this is perhaps their last chance.
As General Manager Li Hui of Toyota China put it at the Auto Shanghai 2025 trade show, “To deliver cars people want in China, we need Chinese brains and hands involved in development.” Appointed earlier this year, Li is the first Chinese general manager of Toyota China.
Even if US President Donald Trump’s tariffs were not disrupting their business in North America, the Japanese could not afford to be driven out of the world’s largest and most dynamic auto market.
More than 31 million new vehicles were sold in China in 2024, according to the Chinese Association of Automobile Manufacturers, of which nearly 13 million were NEVs (New Energy Vehicles, including battery-powered, hybrid and fuel cell vehicles). In comparison, nearly 16 million new vehicles were sold in the US, of which about 3.2 million were NEVs.
Auto Shanghai 2025, the 21st iteration of the exhibition, was held from April 23 to May 2. Organized by the Council for the Promotion of International Trade, Shanghai, and the China Association of Automobile Manufacturers, the event reportedly attracted nearly 1,000 auto, auto parts and other auto supply chain companies from 26 countries and regions.
The exhibition, where 1,366 vehicles were on display, of which 70% were NEVs, drew one million visitors. Car and Driver magazine noted that “While auto shows have slowly been withering away in the United States, with fewer and fewer in-person reveals each year, the car show is thriving in China.”
MotorTrend wrote: “Back in the ’50s Americans used to go to GM’s Motorama shows to get a glimpse of the future, gasping in awe at fully functional concept cars like the turbine-powered, titanium-bodied Firebird III and exhibits that showed autonomous driving technologies. Fast forward seven decades and the world comes to China to see the future arriving in real time.”
Hoping to be a part of that future, Japanese automakers presented several new vehicles in Shanghai.
Toyota launched an electric sedan, the bZ7, which was developed by Guangzhou Automobile Group (GAC), Guangzhou Toyota Motor and Toyota China Co’s Intelligent ElectroMobility R&D Center. Significantly, the bZ7 is equipped with Huawei’s HarmonyOS cockpit system.
At the exhibit, Toyota’s Li spoke about the company’s “One R&D system and Region Chief Engineer approach” to product development in China, which he said “integrates resources from the Intelligent ElectroMobility R&D Center by Toyota (China), FAW Toyota, GAC Toyota and its joint venture with BYD into a unified platform, enhancing collaboration with local Chinese suppliers and technology firms…”
Toyota also unveiled its latest Lexus ES luxury sedan, which comes in both hybrid and, for the first time, pure battery-powered versions.
Honda presented the GAC Honda GT and Dongfeng Honda GT, the second set of “Ye Series” electric vehicles developed specifically for China. These and other Ye Series cars will use AI technology from DeepSeek to enhance the in-vehicle experience.
Nissan presented an electric sedan, the N7, made by Dongfeng Nissan, and a plug-in hybrid pickup, the Frontier Pro, designed and produced by affiliated Zhengzhou Nissan. The N7 is equipped with Momenta’s Advanced Driver Assistance System (ADAS).
Toyota and Honda also work with Momenta, a Chinese developer of assisted driving technologies that are also used by Volkswagen, Mercedes Benz and GM. Among Chinese automakers, Momenta works with BYD, GAC and SAIC. Momenta’s shareholders include SAIC, Toyota and Daimler (Mercedes-Benz).
Momenta founder and CEO Cao Xudong said at the exhibit that, “We are the first Chinese company that has successfully deployed assisted driving technologies, such as highway and city navigation features, across multiple countries worldwide, including Germany, France, and Japan.” Momenta has offices in Stuttgart and Toyota City.
Mazda unveiled the new EZ-60 electric SUV developed by Changan Mazda, its joint venture with Chongqing Changan Automobile Co. Sony attended the event for the first time, targeting the Chinese in-car entertainment market.
German makers are taking a similar approach to the Japanese. On the evening of April 22, the day before the start of the show, Volkswagen announced what it calls “the next generation of intelligent, fully connected vehicles (ICV).”
The company said on its website that, “Auto Shanghai 2025 marks the beginning of the Volkswagen Group’s largest ICV-offensive in China to date. By 2027, the Group will launch more than 20 fully electric and electrified models (NEV) as part of a comprehensive product offensive. By 2030, the Group’s brands will offer around 30 all-electric models.”
German auto parts, software and services provider Bosch signed a technology cooperation agreement with Chinese automotive AI and ADAS developer Horizon Robotics. Bosch also announced its first order in China for in-vehicle AI computers for vehicle cockpits.
Christopher Hartung, president of Bosch Cross-Domain Computing Solutions, told the Chinese press that “We look forward to collaborating with outstanding partners like Horizon Robotics to jointly advance the global development of intelligent driving technologies.”
Like their Japanese competitors, German automakers’ share of the Chinese market is now about 13%, according to MarkLines. And like the Japanese, they are seeking ways to bounce back after losing share to local automakers. As the CEO of German auto parts and systems supplier ZF put it, “If you stop investing here, you get left behind.”
The Japanese and Germans should be able to maintain a significant share of China’s auto market. The same cannot be said for the Koreans (Hyundai Motor, its affiliate Kia and premium brand Galaxy), whose share has dropped below 2%.
Led by General Motors (GM), the Americans have about 9% of China’s market, including through their local joint ventures. Tesla accounts for only 2% of total auto sales in China and about 5% of NEV sales.
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