Japanese automaker Honda is taking steps to address declining sales in the Chinese market by cutting engine production capacity at its factories in China. According to sources, Honda Motor plans to halve its engine production capacity at its factory in China by the end of March.
The Nikkei Asian Review reported that Honda will shut down one production line at its engine plant in Guangdong province, reducing its annual production capacity in partnership with China’s Dongfeng Motor Group from 520,000 units to 260,000 units. This marks Honda’s first reduction of internal combustion engine capacity in China and is expected to impact about 30% of its sales of fuel cars in the country.
In 2024, Honda saw its sales in China drop to 850,000 vehicles, a decrease of about 30% from the previous year and marking the first time in nine years that sales fell below 1 million units.
Moreover, Honda’s other joint venture in China, Guangzhou Honda Automobile, a partnership with Guangzhou Automobile Group, halted production at a fuel car factory in January with an annual capacity of 240,000 units. Honda had previously closed another factory operated by Guangzhou Honda.
With the production capacity reduction, Honda has offered early retirement plans to employees at the affected factories, though specific target numbers have not been disclosed. As of the end of 2024, Honda’s total workforce in China, including joint ventures, had decreased by about 30% compared to April 2023.