Honda has reduced its annual production capacity for fuel vehicles from 1.49 million units to 1 million units. Let's take a look at the domestic demand situation as of July 14th.

Toyota: Cumulative annual sales of 691,000 units, down 14.80% year-on-year.

Honda: Cumulative annual sales of 443,000 units, down 18.33% year-on-year.

Nissan: Cumulative annual sales of 308,000 units, down 1.06% year-on-year.

I think the largest-scale production cuts by Japanese automakers are quite normal compared to this year's sales expectations. With half-year sales of 443,000 units, maintaining a capacity of 1.5 million doesn't make much sense. Honda claims this move is to "accelerate the steady transition to electric vehicles and optimize production capacity to achieve sustainable growth in our four-wheel vehicle business in China." But it's just nice-sounding words.

The rise of China's new energy vehicles, especially plug-in hybrids, has put Japanese automakers under tremendous competitive pressure. The current situation is that the more they shrink, the more marginalized they become. In the end, only Toyota might fare relatively well, while Honda and Nissan could become niche brands in China.