In Depth: Japanese, German Carmakers Lose Ground in China After Falling Behind on EVs

January turned out to be a bad month for Japanese car sales in China.

For Nissan Motor Co. Ltd., Japan’s third-largest automaker, sales in China plunged 64.4% year-on-year. Japan’s No. 2 automaker, Honda Motor Co. Ltd., did slightly better in the month, with its sales in China falling 56.2% from the previous year.

They weren’t the only automakers to feel pain, after the government did away with a long-running tax break and subsidy policy for electric-vehicles (EVs) at the end of last year. Some industry watchers suspect the change caused customers who would have bought a car in January to move up their purchases to the end of last year. Nonetheless, the two Japanese firms suffered much deeper sales drops than the China auto market as a whole, where total passenger vehicle sales in January were down 37.9% from the previous year.