March 2, 2026 | Honda revives reverse-import strategy; Lei Xing says Chinese EV threat ‘overblown’

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Welcome to daily drive for Monday, March 2nd,

2021-26. I'm Jake Nier in Detroit, in for Kellen Walker.

Today on the show Honda ships US-built models back to Japan for the first time since 1988.

European Auto Suppliers face a poly crisis with 350,000 jobs at risk and first brands bankruptcy heads toward resolution with four potential buyers.

Plus, we'll hear from Le Sheng, an independent analyst on the Chinese auto industry, about why he thinks the threat from Chinese EV makers is not as dire as many experts believe.

Okay, the Chinese are here. They're going to produce in the US. The floors and jams they're done. I don't buy that.

It's just overgrown. I laugh at it.

Let's run through all the news you need to know to keep up in the auto industry.

Honda is bringing Accura to Japan for the first time by shipping US-built models back across the Pacific.

The automaker will export the high-performance Accura Integra Type S and Honda Passport Trail Sport Elite to Japan, starting in the second half of this year.

Both will keep their American specs, including left-hand drive, despite Japan being a right-hand drive country.

It's Honda's first reverse import since 1988, when it shipped Ohio-built Accords back to its home country.

The move comes as Japan eases import rules and faces pressure over its $34 billion trade surplus with the US.

We'll have more on the story in a minute with our own Irvox Carcaria.

European auto suppliers are in what experts are calling a poly-crisis, hit-by-slow EV adoption, Chinese competition, and automaker pressure to cut prices.

The European Association of Automotive Suppliers warns 350,000 jobs are at risk by 2030.

Major German suppliers like Bosch, ZF, Continental, and Sheffler have already announced 34,000 cuts.

Half of suppliers plan to reduce Western Europe production capacity as profit margins sink below sustainable levels.

Meanwhile, 11 of 16 planned European battery factories have been delayed or cancelled.

And bankrupt supplier first brands has four potential buyers lined up for its remaining auto parts factories, three of which supply Ford Motor Company.

The company has been operating week to week with automaker support after running short on cash.

Ford has paid for parts in advance and covered administrative expenses to keep operations running.

Creditor groups remain in mediation for two more weeks to finalize a resolution deal.

The proposed sales aim to preserve thousands of jobs and avoid a full liquidation that would shudder remaining facilities.

And those are today's headlines. You can find more details on all of those stories at autonews.com.

Now let's dig a little bit deeper into that Honda story with our own Irvach Karkaria,

who's been covering this for automotive news. Irvach, welcome back to Daily Drive.

Hi, Jake. Thanks for having me. Hope you had a good weekend.

Same to you, sir. This story is really interesting and I can't help but wonder.

Does it seem to you like this is about trade politics or is this actual market demand that's driving this decision?

Yeah, I think it's a bit of both. It seems to be at least in Honda's case, it seems to be more about optics than it is about significant demand for these cars in Japan.

The reason being that Honda will be exporting these US-made cars in left-hand drive mode while Japan, as you know, is a right-hand drive, a market.

Obviously the Germans have done this in the past and other automakers have done it, but it's for niche audiences, the enthusiast markets.

According to order forecast solutions, because of the drive configuration, the forecasting company expects that Honda would sell only about five to six thousand units combined between both the passport,

or trail sport and the Accura Integra in Japan. So I don't think Honda expects this to be a high volume move, but it kind of helps to some extent sort of satisfy the Trump administration, which has been pushing for more American production.

And it also will help somewhat offset the huge trade imbalance between Japan and the United States.

You mentioned in your piece that Toyota and Nissan are also looking at reverse imports. Do you see this becoming a broader strategy for Japanese automakers to address these trade imbalances?

Yeah, I mean, I think it's kind of a ripple effect when one starts doing it than the other's kind of follow, though I think they're doing it for different reasons.

I think in Nissan's case in particular, exporting to the Japanese market could be driven by the fact that they have access capacity in the US.

Nissan is considering exporting the Marano and Pathfinder to Japan, while the Pathfinder, which was refreshed this year, is seeing decent demand.

The long and the tooth Marano is having some demand issues. And Nissan is managing the supply, but this is also a quick way of moving some of the production here to the Japanese market and reducing the pressure on the dealer network in terms of inventory.

Fascinating stuff. We'll keep an eye on this as you're reporting moves forward on this. Ervaks, thank you so much for joining us on Daily Drive.

Thank you, Jake. Coming up, we'll hear from Analyst Lay Sheng on why he thinks fears about Chinese EV makers are overblown. That's next on Daily Drive.

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Welcome back to daily drive. I'm Jake Near. You've probably heard the narrative that Chinese EV makers pose an existential threat to legacy automakers that once they enter Western markets, it could be game over for the likes of Ford and GM.

But analysts lay shing isn't buying it. He spoke with our own Molly Boygon on the shift podcast about why he thinks the threat is overblown and why it could take decades for Chinese brands to truly establish themselves in the US market just like Hyundai and Kia did. Here's a piece of that conversation.

You were talking earlier about the possibility of Chinese manufacturers working with domestic manufacturers.

And I think this is a really interesting point. How do you view that strategy for the Western automakers, because as I've said, analysts and industry people, executives, other folks that I talked to see the entry of Chinese vehicles to the market as almost like a death knell for the domestic auto industry.

And at the same time, do not partner with Chinese automakers would also appear to be a mistake. So why do you think they're, you know, and I guess actually to back it up further.

How in depth are those conversations at this point? Like how far along is the possibility of partnership between the domestic auto industry and the Chinese automakers?

So we have to find some kind of a middle ground, right? The narrative that it's a existential crisis. There's some truth to it. The narrative that the Chinese, I mean, Elon Musk said it, right? They'll dominate without the protection in place.

I think it's overblown because in order for the Chinese to establish themselves, I think coming in and getting a foothold is only the beginning.

But from there until you establish yourself as a kind of a Americanized brand, I think that will take decades.

Just like what Hyundai and Kia did, right? Hyundai Kia. I'm an owner of a Hyundai. And I don't feel like Hyundai is a Korean brand. I feel like they're just American brand.

Uh, whatever it's selling Toyota Volkswagen. Any of these foreign automakers selling the US, I don't, I don't feel as much as the, the politicizing of it being a German brand or it being a Korean brand or it being a Chinese brand. But for China, for the Chinese brands, that kind of a narrative. It's much more blown out of proportion, I think.

Because, right, the Chinese, are they going to compete in the, in the pick up, right?

Right. What sells in the US market? I think it's only going to be slowly, slowly establishing a foothold. And then we can talk about Chinese being where the Koreans are today in the US market.

How they're involved in the local communities, right? How they're involved in the, to that kind of point, it's, it's going to take years.

And what Canada is doing is actually, right, giving you a small kind of quota, 49,000 units, increase that a little bit, 50,000, 60,000. But it's still such a small portion.

Of the market that entities at the beginning is more to give consumer and, and extra option or affordability, rather than, okay, the Chinese are here, they're going to produce in the US, that the flaws and jams, they're done.

I don't buy that. It's just overblown. I, I laugh at it.

I think that you're, you're the first person, you're the first person I've talked to who said that. But I think you make an interesting point because

what's really happened, given that the industry is so global, is that as you said, some of the Asian automakers, you know, Toyota, Hyundai, Kia, have basically, as you said, they're not, they're not the domestic auto industry. But in, in a way, they do feel like domestic brands, and they have manufacturing footprints here in the United States, and they employ American workers and all of this. So it sounds like you're saying that the Chinese will follow that path to be entrenched in the domestic auto.

Is that, is that what you're getting at?

Yeah, that's, that's, that's what I'm saying. And that process, so we're going to take some time. I think the easy part is not actually coming into the US and getting a, let's say we set up as joint venture work with Ford,

be an idea for supposedly set up a joint venture or Xiaomi.

Aside from the geopolitical kind of the red light, right, that that that presents, it's just the kind of a starting point.

And until you get to be an established brand or automaker in the US, that take significant amount of resources investment time for that to happen.

At the same time, overcoming this politicizing of China, right, if at all, that that's one kind of pointing to.

You know, in, in our conversation, it sounds like the Department of Commerce rule comprises the main regulatory obstacle. There are, as you say, kind of, like cultural or organizational obstacles to, like, meaningful Chinese entry to the US market.

I think it's really interesting that the tariff actually doesn't appear to be that big of a deal. I'm thinking in particular of the 100% tariff on Chinese electric vehicles established under the Biden administration.

Is that because the vehicles are so much cheaper to begin with, like that that doesn't, that doesn't appear to be a meaningful obstacle or how are you thinking about the role of tariffs as Chinese automakers look to enter the US.

Well, the tariff is still a huge obstacle. I mean, you compare the six, is it 6.2% in Canada now for after the reduction compared to 100% right? There's the, there's the fentanyl component that given announcement by the Supreme Court, there's actually a portion that should be gone, right?

I forget the percentage, I don't know, 25% or something, but still it's still at least 100% plus the 2.5% right?

Uh, the number probably is higher, but that's, that's a huge wall. It's one of many. There's a ICV software hardware band. There's the tariffs and then you have to meet the NHTSA and the FM VSS, whether it import or produce in the US.

And then just there's also these various pushbacks, right? The NADA recently as association, they will support blocking and Chinese automakers.

Right? This was said on on record, but they will not stop their members from being kind of in a franchise if they were to the right that the dealer laws are even different in the US.

For example, in Europe, how it works is that you could house different brands under the same roof. So half of a dealership could be selling on Mercedes and the other half are selling an expo.

So this is, it's actually called a auto house. I was, I was in Germany last year. And that's, that's actually what happens. I think in the US, there's no way you can do that, given the current.

And that's, that has to deal with the cost of it being the same roof on our same location, utilizing half of the dealership right from a cost perspective, it saves you money. But in the US, it's, it's both costs and the legal aspect.

Right? So there's these various sets of walls that are set up. And then if you, let's say,

if somehow the agreement is to produce many America, you hire American workers, then contingent upon that, some of these walls go down. That's what I'm kind of thinking of could happen.

The product safety quality thing is probably the easiest. The Chinese automakers, they're there. They caught up. I mean, Varnan, they caught up in terms of product quality. I have no doubt that they, you know, they can meet the whatever the standards.

But you still need to take. It's a process that you still need to partake to get there.

You can hear our own Molly Boygon's full conversation with Analyst Lesheng on the latest episode of the Automotive News Shift Podcast available now.

That's daily drive for today. I'm Jake Nier and for Kellen Walker. Thanks to our own Erbach Karkaria for his reporting for today's podcast, we also had reporting from Lois Jones of our sibling publication Automotive News Europe.

You can get the latest news on trade strategy, supplier challenges, and everything happening in the auto industry at autonews.com.

Come back tomorrow for a conversation with Dan Hirsch of Alex Partners about what the conflict in Iran will mean for the auto industry.

If this were to escalate many meaningful way, it could certainly become as bigger bigger than the Russia Ukraine conflict, which had severe disruption in a number of ways.

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