Due to sluggish sales in the Chinese market, Honda, the second-largest Japanese automaker, will be closing two fuel car factories in Guangzhou and Wuhan, reducing its annual production capacity in China to 720,000 vehicles.
According to a report from Japan’s “Toyo Keizai” on April 17th, the closures involve two joint ventures: GAC Honda (a joint venture with Guangzhou Automobile Group) and Dongfeng Honda (a joint venture with Dongfeng Motor Corporation). One GAC Honda factory is expected to shut down in June this year, while one Dongfeng Honda factory is scheduled to close next year. Honda will shut down 2 out of its total of 4 fuel car factories with GAC Honda and Dongfeng Honda. This will decrease Honda’s annual production capacity in China from the current 1.2 million vehicles to 720,000 vehicles.
Currently, Honda owns 6 complete vehicle production factories in China through joint ventures. However, since reaching a peak sales volume of 1.627 million vehicles in China in 2020, it has been on a downward trend for five consecutive years. Sales dropped to 645,000 vehicles in 2025, a year-on-year decrease of 24.3%, and only 122,000 vehicles were sold in the first quarter of 2026, a 22.4% decrease compared to the same period last year, with no signs of recovery.
It was reported that Honda announced last month that it would impair its assets related to its Chinese operations to strategically reorganize for its electric vehicles. The restructuring costs could reach as high as $15.7 billion.
In addition to closing factories, Honda is also progressing with adjustments to its research and development system. Several sources revealed that the electric vehicle factories in Guangzhou and Wuhan are planning to start producing electric vehicles and plug-in hybrid electric vehicles from 2028.