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(Bloomberg) — Japan’s biggest automakers pledged cooperation in tech-focused areas to survive in the rapidly evolving global industry, just as two of its largest car brands begin negotiating a deal that would effectively split the country’s industry in two.
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Over the next decade, manufacturers will need to pool resources and collaborate in areas like artificial intelligence and electric vehicles to catch up with the technologically sophisticated cars available in other markets, the Japan Automobile Manufacturers Association said in its road map for 2035.
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The call to action comes at a pivotal time for Japan’s industry. Honda Motor Co. has just announced a deal that would see it fold a flailing Nissan Motor Co. into its business in tie up that would pit the duo against Toyota Motor Corp. and its partnerships with Mazda Motor Corp., Subaru Corp. and Suzuki Motor Corp.
While that deal would carve up the domestic sector, Japan’s automakers — famous for their efficient and reliable models — are united in their struggle to regain ground they’ve lost to the flashy offerings 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,” JAMA said in a statement Tuesday.
In China itself, the world’s largest car market, Japanese marques are fighting for survival. But a wave of Chinese EVs are now eking out a growing share of Southeast Asia — long considered a stronghold for Japan’s legacy brands.
There are some bright spots: Toyota Motor Corp., which has been criticized for its hesitation to shift away from gas guzzlers, has been a major beneficiary of a jump in demand for hybrid cars in North America. But rapid shifts in consumer preferences around the world mean there’s a vast gap between Japanese models and pure-electric brands like Elon Musk’s Tesla Inc. and China’s BYD Co.
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At the same time, the global auto industry is being buffeted by rising trade tensions. 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 Japanese automakers. In the weeks leading up to the announcement of its deal with Honda, the company slashed jobs and production, reported a massive drop in profit and undertook an overhaul of its executive bench. The partnership that’s set to bring the two brands under a single holding company is expected to list by August 2026.
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