Automotive Industry Rebounds in 2023: Car Production and Sales Surge Amid Semiconductor Relief

Latest Update December 31, 2023
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In the automobile industry of 2023, production and sales rebounded as the coronavirus pandemic waned, and the semiconductor shortage began to alleviate. However, challenges emerged, particularly in China, the world’s largest market, where the transition to electric vehicles (EVs) intensified, putting pressure on manufacturers. In the United States, new challenges surfaced, including rising labor costs amid soaring prices, impacting profits.

Global production by eight domestic passenger car companies exceeded the previous year's figures for nine consecutive months through October. Cumulative production from January to October 2023 increased by 6.7% compared to the same period last year, totaling approximately 21.38 million units. The automotive industry has largely recovered from the pandemic's impact, with the coronavirus being "no longer a factor in the increase or decrease in production and sales" (Toyota Motor Corporation). While the semiconductor shortage still has lingering effects, major automakers indicated around September that the impact had "almost disappeared." Shortages in certain markets are gradually easing, with sales showing continuous recovery.

In the Chinese market, the demand for new energy vehicles (NEVs), including EVs, is expanding. Japanese and European manufacturers of gasoline-powered vehicles face challenges. Cumulative sales in China from January to October declined by 25.1% for Nissan, 16.7% for Honda, and 3.6% for Toyota. In October, Mitsubishi Motors decided to withdraw production from China. Toyota and Honda are reducing their workforce as part of cost-cutting measures amid increased pressure to improve profits.

In the Chinese market, excess production capacity among companies and struggles to secure profits have led to increased exports to Southeast Asia and Europe. Japanese car manufacturers hold a significant market share in Southeast Asia, but competition with Chinese cars is expected to intensify in the future. 

Additionally, despite robust production and sales in the United States, rising labor costs due to soaring commodity prices pose challenges. The "Big Three" major American companies—Toyota, Honda, and Nissan—have decided to raise wages. Parts manufacturers face difficulties in securing labor, leading to cases where production is affected. Trends in the U.S. economy are likely to significantly impact each company’s performance in 2024.

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Source:  Nikkan Kogyo Shimbun