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Honda Cuts Production in China and Shuts Down Two Production Lines
Published: 8.1.2024
In China, the world's largest auto market, Honda recently announced that it will cut 30% of its gasoline vehicle production capacity, a decision that marks an important step in Honda's global strategic adjustment. According to reports, Honda plans to achieve this goal by closing or suspending production at two factories in Guangzhou and Wuhan, with production capacity expected to drop from 1.49 million vehicles to 1 million vehicles, accounting for about 10% of Honda's global production.
A Honda spokesman said the move is part of Honda's response to changes in the Chinese market. With the rapid development of China's auto market, especially the new energy vehicle market, Honda is facing strong competitive pressure from Chinese independent brands.
On July 3, Honda China announced its terminal car sales in June and the first half of 2024. Data showed that Honda's sales in the Chinese market have declined in recent years. In June this year, Honda's terminal sales in China were only 68,966 vehicles, a year-on-year decrease of 39.04%; while the cumulative sales from January to June were 415,906 vehicles, a year-on-year decrease of 21.48%.
As the competitiveness of new energy independent brands continues to improve, the market share of Japanese joint venture brands in China is gradually decreasing. According to the data from the China Passenger Car Association, in June this year, the sales volume of Japanese cars in China was about 251,900 units, a year-on-year decrease of 25.3%; from January to June this year, the cumulative sales volume of Japanese cars in the mainland was about 1.466 million units, a year-on-year decrease of 12.4%.
Correspondingly, data released by the China Association of Automobile Manufacturers showed that in the first half of this year, the production and sales volume of new energy vehicles reached 4.929 million and 4.944 million units respectively, an increase of 30.1% and 32% respectively over the same period last year, and the market share reached 35.2%.
Faced with the shrinking market share of fuel vehicles and the expansion of the market share of new energy vehicles, Honda is taking rapid measures to cope with environmental changes. GAC Honda officially stated: "The company currently has 4 vehicle production lines (annual production capacity of 770,000 units) and 1 production line under construction (designed capacity of 120,000 units). The fourth production line with an annual production capacity of 50,000 units is scheduled to be closed in October 2024, and the new energy production line under construction will be put into production in November this year. Through the two new electric vehicle factories under construction, Honda plans to produce electric models with the joint venture between GAC and Dongfeng to make up for the reduction in production capacity. The goal is to start production in these two new factories later this year, and it is expected to restore production capacity to 1.44 million vehicles.
Honda's strategic adjustment is not only a response to current market challenges, but also a prediction of the future development direction of the automotive industry.
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