On May 15th, an internal employee of GAC Honda disclosed that the car company has initiated a large-scale layoff of over a thousand people, involving multiple production lines. According to the report from the Nikkei Asian Review on the same day, due to slow sales in China, Honda has started to solicit voluntary resignations from its formal employees in the area. Approximately 1,700 employees engaged in production tasks at the factory have applied, accounting for 14% of the total number of employees at the joint venture company in the local area.
The deteriorating business environment has prompted Honda and GAC Group’s joint venture, GAC Honda, to begin the process of soliciting voluntary resignations from local employees starting in May. Another report from Yicai stated that several GAC Honda management personnel indicated that this round of layoffs may involve middle-level managers. “The salary of one department head is equivalent to that of two workers. While there are no immediate plans to lay off department heads, future structural simplification may likely have an impact,” said a GAC Honda management personnel who requested to remain anonymous.
In response to the layoff rumors, GAC Honda stated that in order to ensure the company’s sustainable operation and accelerate strategic transformation, they will further enhance workforce efficiency. Measures include not renewing the first-time labor contracts of some employees in the production field upon expiration and negotiating voluntary termination of labor contracts.
The sales data for the first quarter of 2024 released by Honda China showed that the end-car sales volume in China was approximately 206,900 vehicles, a 6.11% decrease compared to the same period last year. Among these, GAC Honda’s cumulative sales were 108,361 vehicles, down by 8.11% year-on-year.
It is worth mentioning that in the fourth quarter of 2023, GAC Honda had already implemented its first layoff in 25 years, dismissing around 900 contract workers, accounting for 7% of the company’s approximately 13,000 employees at that time.
According to statistics from the China Association of Automobile Manufacturers, the market share of Japanese brands in China was 23.1% in 2020 but dropped to 12.2% in the period of January to April 2024.
Japanese car companies established joint ventures with Chinese enterprises in the 2000s to expand their production scale but are now forced to adjust their Chinese operations. Apart from GAC Honda, other car companies such as SAIC Volkswagen and GAC Toyota have also implemented layoffs, which could have a certain impact on the development of the automotive industry.
Furthermore, Mitsubishi Motors decided to withdraw from car production in China last year.