TOKYO (Reuters) -Japan’s Mazda Motor needs to overhaul its strategy in China, the world’s biggest auto market, where it faces increasingly tough competition from domestic players, the automaker’s chief executive said on Friday.

CEO Masahiro Moro said business conditions for Mazda in China, where it has a joint venture with Chongqing Changan Automobile and China FAW, would become increasingly tough over the coming year to 18 months.

Moro said it was not planning to “scale back”, although the company was planning to cut fixed costs.

“Production output will be low for the time being while pressure on profits is increasing,” Moro told reporters at a roundtable meeting.

“The important thing is to turn the tide and introduce electric vehicles one by one,” he said.

During a visit to Mazda’s China unit last month, Moro said he discussed with the joint venture’s management efforts to catch up with the high speed of electrification.

Mazda is a small player in China, where its best-seller is the Mazda 3, according to the industry data, which also showed it trailed EV startups NIO and Xpeng in the country in 2022.

Overall, Mazda’s sales in China in 2022 were down 41% from the prior year to just over 108,000 vehicles, according to company data.

Its sales in China peaked in 2016 at just over 316,000 vehicles, separate industry data showed.

Mazda is not alone in finding the Chinese market increasingly tough.

Mitsubishi Motors’ local joint venture with Guangzhou Automobile Group on Thursday said it would cut staff costs after a decline in sales of its Outlander sport utility vehicle.

Looking beyond China, Moro said if Mazda were to begin EV production in North America, it would happen after 2027, which marks the end of the middle phase of its business plan for this decade.

He also said Mazda did not plan to make EVs at a plant it built with Toyota Motor in Huntsville, Alabama, where it is making Mazda CX-50 crossovers.

(Reporting by Daniel Leussink; editing by Jason Neely, Kim Coghill and Barbara Lewis)

---