08/10/2025
Germany and Japan’s car industries are currently under serious threat from China’s rapidly advancing electric vehicle (EV) sector. China is heavily subsidizing its automobile manufacturing industry with billions of dollars and providing extremely cheap electricity — a combination that makes competing with it nearly impossible for the rest of the world.
As a result, German and Japanese auto giants are now considering mergers and alliances. Even American companies have started to take Chinese automakers seriously, given their soaring sales and rising share prices. Meanwhile, declining profits and falling sales among German and Japanese companies — who have dominated the global market for decades — have become a major concern. In Germany alone, nearly one million jobs are currently at risk, raising questions about the future of the German automobile industry.
In Germany, the Volkswagen Group (VW) remains the largest car manufacturer, owning several major brands such as Volkswagen, Audi, and Porsche. Other key players include Mercedes-Benz and BMW. All of these companies are now exploring possibilities of collaboration or strategic partnerships.
Similarly, Japan’s automakers are being forced to consider mergers, alliances, or partnerships to withstand the aggressive competition from Chinese EV manufacturers. This trend is already beginning to take shape in certain cases.
Why Mergers or Partnerships May Be Necessary
Several key factors may push Japanese companies toward consolidation:
1. Competitive pressure — especially from China:
Chinese automakers are advancing rapidly in the EV/NEV segment, offering lower prices and cutting-edge technology. This has caused Japanese brands to steadily lose market share, particularly in China, where their presence has weakened significantly.
2. Enormous investment requirements:
Developing electric vehicles, battery technologies, autonomous driving software, and hydrogen fuel systems requires massive R&D and capital expenditure. It’s difficult for a single company to bear these costs alone — hence, partnerships or mergers can help achieve economies of scale.
3. Resource and supply chain collaboration:
Joint efforts in sourcing batteries, semiconductors, and electronic components can reduce costs and stabilize supply chains.
4. Market access and localization:
If one company has stronger access to certain markets (like China or other parts of Asia), merging or partnering can help both parties enter those markets more easily and establish localized production or development hubs.
In December 2024, reports emerged that Honda and Nissan were planning to finalize a merger agreement by 2026 to strengthen their global competitiveness against Chinese challengers. However, in February 2025, the two companies announced the cancellation of that plan — mainly due to disagreements over terms, partnership structure, and maintaining equal standing.
In June 2025, news broke that Toyota’s truck unit “Hino Motors” and Daimler’s “Mitsubishi Fuso Truck & Bus” division had agreed to form a joint holding company. The goal was to enhance their position in the commercial and heavy vehicle sector, particularly in electric and hydrogen-powered technologies.
Japanese car brands such as Toyota, Honda, and Nissan each have strong and distinct identities. Merging these brands raises critical questions: under what name would new vehicles be marketed, and which brand would take precedence? These issues are still under discussion.
Meanwhile, China’s electric vehicles are spreading across the globe like a tsunami. However, there’s a severe shortage of skilled EV mechanics worldwide — creating millions of job opportunities in the coming years. Those who start learning this skill today can turn it into a stable and lucrative career anywhere in the world.
If you are connected to the automobile industry in any way, it is crucial for you to understand where this industry will stand in the next decade. Otherwise, you may face the same fate as Nokia phones or Yashica cameras — realizing too late that the world has moved on.
At the very least, buy and start using an electric vehicle (EV) today. This hands-on experience will give you valuable firsthand knowledge when working on future R&D projects.
China is not slowing down — and with cheaper prices, lower fuel costs, minimal maintenance, and advanced features, who can resist buying a Chinese EV, and for how long?
