On Thursday, Japanese automaker Honda announced that due to sales difficulties, the company will reduce annual production capacity of around 290,000 gasoline cars in China. This marks Honda’s first capacity reduction in China.
A spokesperson for Honda stated that they will halt operations at joint factories with GAC Group and Dongfeng Company in October and November respectively.
The joint factory with GAC Group, which has been in operation for nearly 20 years, produces Honda Accord sedans with an annual capacity of 50,000 vehicles.
The spokesperson mentioned that Honda will suspend production at another joint factory established with Dongfeng starting from November, with an annual capacity of 240,000 vehicles.
Currently, Honda’s annual production in China reaches 1.49 million vehicles. This production cut represents a reduction of nearly 20% in car manufacturing capacity.
Honda stated that they plan to complete construction and commence production at two electric vehicle joint factories with GAC and Dongfeng later this year, aiming to restore vehicle production to 1.44 million units annually.
The spokesperson expressed that Honda expects these changes to optimize their production capacity in China, acknowledging the challenging situation the company is facing in the country.
The latest development highlights the challenges Japanese carmakers are encountering in China, as intensified price competition and the surge of domestically manufactured electric vehicles have resulted in a sharp decline in Japanese vehicle sales.
Nikkei Asia was the first to report on Honda’s capacity reduction in China. Following that, Reuters and Kyodo News also quoted Honda’s spokesperson for coverage.
However, Nikkei Asia also mentioned that another factory in Guangzhou may potentially shut down or halt production. If this factory does cease production, China’s annual production capacity could further decrease by approximately 200,000 vehicles.
Other Japanese automakers are also restructuring their operations in China.
In June of this year, Nissan announced the closure of its advanced production plant in Changzhou, Jiangsu Province, with an annual capacity of around 130,000 vehicles, accounting for about 10% of China’s total production.
Last year, Mitsubishi Motors announced the cessation of car production in China.
In March of this year, Nissan and Honda expressed their consideration of establishing a strategic partnership, collaborating on car software development and seeking cooperation in the electric vehicle charging field to reduce costs for both car manufacturers.
Given the sluggish sales of Japanese cars in China, Nippon Steel also plans to significantly reduce its production capacity in China.