Recently, Honda made a significant decision to adjust its operations by planning to close or halt production at two of its gasoline car factories in China, responding to market changes. The factory in Guangzhou will shut down in October, while the Wuhan facility will cease operations in November, with component production and research facilities remaining intact. These measures will reduce Honda's annual production capacity in China from 1.49 million to 1.2 million vehicles, representing 10% of its global capacity. Honda stated that the current downturn in Japanese car sales in China prompted this largest-scale reduction among Japanese automakers.
Simultaneously, Honda plans to establish two new electric vehicle factories in China, expected to start production later this year, aiming to restore capacity to 1.44 million vehicles. Honda emphasized that China, as the world's largest market, remains crucial for its operations.
A Honda spokesperson indicated that these adjustments are in response to rapid developments in the Chinese market, particularly amid intense competition in the electric vehicle sector from domestic brands. Sales data for Honda showed a 21.48% year-on-year decline in the first half of 2024 in China.
Additionally, Honda faces challenges from Chinese brands like BYD in a price war. To cope with market pressures, significant discounts have been implemented by dealerships for models like the Accord, yet dealers under Dongfeng Honda and GAC Honda still suffer losses.
Honda's strategic adjustments in China not only impact its domestic market but also encounter competition from Chinese new energy vehicle companies in Southeast Asia. Suzuki and Subaru announced factory closures in Thailand, where Honda also plans to reduce its vehicle production capacity. Meanwhile, Chinese new energy vehicle companies such as BYD are engaged in competitive battles against Japanese brands in the Thai market, reshaping market shares dynamically.
These adjustments by Honda reflect shifts in the global automotive market landscape and the growing competitiveness of the Chinese market.
