Toyota urges Japanese automakers to join forces as Chinese EVs gain ground globally

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Toyota Vice Chairman Koji Sato is calling for Japanese automakers to work together on common standards for selected vehicle parts as Chinese brands continue to gain ground in key global markets.

The proposal would standardise components such as steel, wiring harnesses and plastics across Japan's major carmakers. By reducing the number of component variations, automakers could lower costs, improve efficiency and put more resources into areas that increasingly influence car buyers.

The push comes at a difficult time for Japan's auto industry, with Chinese manufacturers steadily taking market share from established Japanese brands in Europe, China, Southeast Asia and Australia.

“Unless things change, we will not survive,” Sato said during Toyota’s annual supplier meeting in March, as Automotive News reported.

Sato did not directly name Chinese automakers. Instead, he described the broader aim as strengthening Japanese carmakers' “international competitiveness.”

Chinese brands overtake Japanese automakers in Europe

The scale of the challenge became clearer in May, when Chinese brands outsold Japanese automakers in Europe for the first time.

According to data from the European Automobile Manufacturers' Association, Geely Group, SAIC Motor, BYD, Chery Automobile and Leapmotor together sold 138,140 vehicles in Europe that month. Combined sales from Toyota, Suzuki, Honda, Nissan, Mazda and Mitsubishi stood at 130,424 units.

The pressure is even sharper in China. Japanese automakers have been slower to embrace the electric vehicle transition, while young Chinese EV companies have grown rapidly with software-defined cars, ultra-fast charging and advanced battery technology.

Toyota's China sales fell 17 per cent in the first half of this year, while Honda's sales declined 35 per cent.

Southeast Asia and Australia are also seeing a similar shift as affordable Chinese EVs take market share from established brands.

With these pressures building across several regions, Sato is taking the proposal to the wider Japanese auto industry through the Japan Automobile Manufacturers Association, which he leads.

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Toyota proposes a new 'Japan standard' for parts

Sato wants major Japanese automakers to use common standards for components that customers rarely see. The idea is to create a new “Japan standard” that suppliers worldwide could manufacture to.

Standardising these parts could allow automakers to redirect money towards areas that matter more to newer buyers, including software features, driver assistance systems, faster-charging batteries and a broader range of powertrains.

Wiring harnesses are one example of the complexity Sato wants to reduce. Suppliers currently produce 70,000 different variants of wiring harnesses alone. Cutting that number could help lower manufacturing costs.

Putting the plan into practice, however, would be a major challenge. Japan's automakers operate numerous brands, models, variants and production lines, and getting the industry to agree on shared components could prove difficult. It also remains uncertain whether standardisation on such a scale is feasible.

Still, Japanese automakers are facing growing pressure as Chinese EV brands expand across their traditional markets. If Sato can bring competing Japanese carmakers behind the plan, the initiative could give the industry a chance to strengthen its position.

“We have a strong sense of crisis that the Japanese auto industry is in a massive period of transition,” Sato told Automotive News. “Now is exactly the time to further develop and evolve with the challenges and reform initiatives that the auto industry as a whole must face.”

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