Japanese OEM China Sales Fall Sharply in July 2026

Three Japanese OEMs recently announced their July 2026 new car sales results in China. Toyota reported sales of 114,700 units in China in July, down 24.3% year-over-year (y/y), marking its sixth consecutive month of y/y decline. Year-to-date (YTD) sales fell 18.2% y/y to 809,400 units. GAC Toyota sold 53,120 units in July, including 11,586 units under the bZ brand, which accounted for more than 21% of its monthly sales. GAC Toyota’s YTD sales totaled 394,200 units, down 8.4% y/y.

Toyota Sales Decline for Sixth Consecutive Month

Toyota Motor Corporation continued to face significant pressure in China during July, with total sales falling 24.3% y/y to 114,700 units. Its YTD sales reached 809,400 units, representing an 18.2% y/y decline. Within its joint ventures, GAC Toyota sold 53,120 units, including 11,586 bZ vehicles, meaning the bZ brand contributed more than 21% of monthly sales. GAC Toyota’s YTD sales declined 8.4% y/y to 394,200 units, while FAW Toyota sold 50,200 units in July, down 26.2% y/y.

FAW Toyota’s YTD sales declined 27.3% y/y to 324,300 units, highlighting the broader weakness across Toyota’s China operations. Toyota said ICE vehicle sales have remained sluggish since March, with rising crude oil prices amid heightened tensions in the Middle East adding pressure to demand. The results indicate that Toyota’s conventional vehicle portfolio remains exposed to changing market conditions, while its bZ-branded vehicles are becoming a more meaningful component of GAC Toyota’s monthly sales mix. The company therefore continues to face a difficult transition within China’s rapidly changing automotive market.

Honda Records Steeper Sales Decline

Honda Motor Co Ltd reported an even sharper contraction in July, with China sales falling 44.1% y/y to 25,052 units. The decline marked Honda’s thirtieth consecutive month of y/y sales decreases. YTD sales fell 35.9% y/y to 230,870 units. GAC Honda sold 12,413 units in July, down 46.1% y/y, while its YTD sales declined 45.9% y/y to 101,852 units. Dongfeng Honda sold 12,639 units, down 42.0% y/y, with YTD sales falling 24.8% y/y to 129,018 units.

Honda attributed the decline to the rising penetration of new energy vehicles across China’s overall automotive market. The company noted that ICE vehicles still represent a relatively high proportion of its sales and that it has yet to launch new NEV models. This combination has increased Honda’s exposure to the structural shift in Chinese consumer demand. The July results show that the company is facing sustained competitive pressure as NEVs gain market share and traditional ICE-focused portfolios become less aligned with the direction of the market.

Nissan Sales Decline as NEV Transition Advances

On August 20, Nissan Motor Co Ltd announced that its July sales in China fell 58.7% y/y to 23,677 units. This marked the fourth consecutive month of decline, with the year-over-year contraction widening further from June amid weakening demand in China’s automotive market. Nissan’s YTD sales fell 22.5% y/y to 261,135 units. Dongfeng Nissan accounted for 21,702 units in July, while Zhengzhou Nissan sold 1,975 units. The results underline the continued pressure on Nissan’s overall China business.

Despite the overall decline, Nissan’s NEV transition showed progress through its N-series lineup. N-series NEVs accounted for 28% of Dongfeng Nissan’s July sales, while YTD sales for the series increased 141% y/y. Nissan said China’s automotive market is evolving rapidly and becoming increasingly competitive, prompting the company to develop a clear plan addressing the shift toward NEVs. The company is steadily implementing that strategy, building on momentum generated by the N6, N7 and Frontier Pro. Nissan also launched the NX8, which it said has been well received by customers.

Japanese Automakers Face a Faster Market Transition

The July results from Toyota, Honda and Nissan highlight different stages of the same structural challenge in China. Toyota’s sales declined substantially but its bZ brand represented more than one-fifth of GAC Toyota’s July volume, while Nissan’s N-series achieved a 28% share of Dongfeng Nissan’s monthly sales and continued to grow strongly on a YTD basis. Honda, by comparison, acknowledged that its relatively high dependence on ICE vehicles and limited NEV launches are contributing to its sales decline. Together, the results show how the accelerating adoption of NEVs is reshaping competitive conditions for Japanese OEMs.

Nissan plans to continue expanding its NEV lineup in 2026 to address diverse customer needs and strengthen its position in China. Toyota and Honda are also operating in a market where ICE demand has weakened and NEV penetration continues to rise. The July figures therefore point to more than temporary sales volatility, as Japanese automakers face an increasingly competitive environment shaped by powertrain preferences, product availability and the speed of new-energy vehicle development. Their ability to expand competitive NEV portfolios will remain important to their performance in China.

Frequently Asked Questions

Why did Japanese OEM sales decline in China in July 2026?
The main pressure came from weaker ICE demand and the rapid expansion of NEVs across China’s automotive market. Toyota reported sluggish ICE vehicle sales since March, while Honda said rising NEV penetration was affecting its results because ICE vehicles still represented a relatively high proportion of its sales. Nissan also cited China’s rapidly evolving and increasingly competitive automotive market. The July results therefore reflect both near-term demand pressure and a broader shift in consumer preference toward new-energy vehicles across the Chinese market.