Toyota And Honda Are Losing China As EV Share Hits 61% And Gas Car Sales Collapse
New Energy Vehicles (NEVs) accounted for 61.4% of China’s April 2026 auto sales, surpassing internal combustion engine (ICE) vehicles, while Japanese automakers like Toyota and Honda saw steep declines in sales. Domestic Chinese brands led the shift, with Toyota’s localized EV sales rising 88% year-over-year despite overall sales dropping 25% in April, highlighting the urgency for foreign brands to adapt to the electric transition.
China’s auto market underwent a dramatic shift in April 2026, as New Energy Vehicles (NEVs)—including plug-in hybrids and battery-electric cars—captured 61.4% of retail sales, surpassing traditional internal combustion engine (ICE) vehicles for the first time. NEV sales reached 849,000 units, while ICE sales plummeted 37% year-over-year to 530,000 units, according to the China Passenger Car Association (CPCA). Domestic Chinese automakers dominated the transition, achieving an 80.1% NEV penetration rate, while mainstream joint ventures—primarily foreign brands—struggled with just 14.1% NEV adoption. Japanese manufacturers faced severe consequences: Honda’s sales in China dropped 48% in April and fell 28% year-over-year through April, totaling 145,065 units sold. Toyota’s overall Chinese sales declined 10% year-over-year to 477,100 units in the first four months, with April sales contracting 25%. Despite the broader downturn, Toyota’s localized EV sales in China surged 88% year-over-year in April, signaling potential for recovery if foreign brands accelerate their electric vehicle rollouts. The data underscores a clear market demand for affordable, digitized EVs, pushing legacy automakers to abandon reliance on ICE vehicles. Without rapid adaptation, foreign brands risk further market erosion as Chinese consumers increasingly favor domestic electric alternatives. The shift reflects broader global trends, with China now controlling nearly 70% of the world’s EV battery production. For Toyota and Honda, the April 2026 figures serve as a critical warning: survival in China now hinges on delivering competitive, localized electric vehicles. The window for adaptation is narrowing as domestic brands solidify their lead in the rapidly evolving EV landscape.
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