Are the Japanese Falling Out of Love with China’s Car Industry?
Toyota, Honda and Suzuki are redirecting billions of dollars from China to India, signalling a profound shift in the balance of global car manufacturing. A few years ago, China was still seen as the undisputed centre of the automotive world. Now the spotlight is moving, and India is stepping forward as the new stage, promising growth rather than risk.
According to LiveMint, Japan’s three biggest carmakers plan to invest more than 11 billion dollars (around 10.2 billion euros) in India, turning the country into one of their most important production and export bases. Toyota and Honda aim to expand local factories and increase capacity, while Suzuki will boost its Indian output from 2.5 million cars to 4 million. A substantial share of that production is destined for export, suggesting that India is fast becoming a new global assembly hub.
The Economic Times reports that Toyota wants to ramp up its Indian production to one million vehicles per year and introduce around 15 new or updated models before the end of the decade. Honda has gone further, announcing plans to build an electric vehicle hub in India that will eventually supply cars to markets worldwide.
Several factors are driving this strategic pivot away from China. The Chinese market has become increasingly difficult: aggressive price wars among local brands and mounting political pressure on foreign firms have squeezed profits to the brink. Reuters describes the situation as “an oversaturated market where price competition has become a fight for survival.”
India, meanwhile, offers what China no longer does, an open economy, fewer political headwinds and generous state support for investment. The Hindustan Times notes that Japanese investment in India’s transport sector grew more than sevenfold between 2021 and 2024, while investment in China plunged by 83 percent over the same period. It is a complete reversal: five years ago, most Japanese capital flowed east to China; today, it is heading for Delhi and Gujarat.
Toyota already operates two major plants in India and maintains a close partnership with Suzuki’s local arm, Maruti Suzuki. This alliance allows the companies to share platforms and supply chains, reducing risk and speeding up product updates. Reuters adds that Toyota plans to expand its supplier network and electrification programme in support of India’s national target to make 30 percent of new cars electric by 2030.
Suzuki, which already dominates India’s car market, is reinforcing its position. In August, the company confirmed an 8 billion dollar (7.4 billion euro) investment in a new factory that will assemble its first electric models.
Honda has not disclosed the size of its investment but told Reuters that India will become its new global hub for electric vehicle development and production. The site will serve both domestic demand and export markets across Asia, Europe and even parts of the United States. The move underlines Honda’s view of India not as a mere sales destination but as a strategic platform for managing the next decade of electrification.
As China battles overcapacity and a ferocious price war among home-grown brands, Japanese carmakers see India as a fresh opportunity. Lower labour costs, a fast-growing domestic market and a supportive tax regime are creating an environment reminiscent of China’s automotive boom in the 2000s.
India is emerging as the third global manufacturing pillar alongside the United States and China, though with a softer touch. Unlike its rivals, it is not trying to dictate terms but to attract investment. For Japanese manufacturers, that represents a rare strategic breather, a chance to secure production and profit while the electric revolution finds its true rhythm.
