AutoBeta(AutoBeta.net)07/26 Report--

On July 25, according to Nikkei Chinese website, Interface News and other media reports, Japanese automaker Honda Motor will reduce fuel vehicle production capacity by 30% in the Chinese market. According to the report, Honda will close and stop production of two fuel vehicle plants in China in order to reduce fuel vehicle capacity. Among them, a GAC-Honda joint venture plant in Guangzhou, which mainly produces Accord cars with an annual capacity of 50, 000 vehicles, will be closed in October, while Dongfeng Honda joint venture plant in Wuhan will stop production in November. The plant has an annual production capacity of 240000 vehicles.

The Chinese market is currently Honda's largest production base, and Honda has five factories left after the closure of the two plants. After the production cut, Honda's annual production capacity of fuel vehicles will be reduced from 1.49 million to 1.2 million, the largest production cut made by a Japanese car company in China.

In response to the production cut, a Honda spokesman said the adjustment is part of Honda's response to changes in the Chinese market, and Honda hopes to optimize its production in China through the move, Interface News reported.

It is important to note that Honda started layoffs in China before closing the plant. In May this year, a number of media reported that GAC Honda launched large-scale layoffs in the form of step-by-step notice, with an estimated scale of thousands of people. Insiders said that this is an overall layoff, involving multiple lines. At that time, GAC Honda responded: "in order to ensure the company's sustainable operation and accelerate strategic transformation, GAC Honda will further improve personnel efficiency. Measures include some employees in the production field do not renew their labor contracts for the first time, and voluntarily negotiate to terminate their labor contracts."

Honda sold 415906 vehicles in China in the first half of this year, down 21.48 per cent from a year earlier, according to official figures. Among them, Honda's sales in China rose 57.28% in January from a year earlier to 100960 vehicles, and then fell by double digits from February to June compared with the same period last year, falling by 38.63%, 26.32%, 22.18%, 34.66% and 39.04%, respectively. As for the decline in Honda's sales in China, industry insiders believe that the main reason is that Honda's fuel cars are difficult to sell and electric cars are not popular.

At present, Honda has two joint ventures, Guangzhou Auto Honda and Dongfeng Honda in China, but whether it is Guangzhou Automobile Honda or Dongfeng Honda, the pressure of competition in China's automobile market has increased sharply, especially in the environment of the extreme annual volume of new energy vehicles. The power of fuel vehicles owned by the two joint venture vehicle companies has been obviously insufficient, coupled with the increase in the number of products of the same class, Honda does not have much advantage in the car market. At present, most of Honda's sales in China still come from fuel cars, which is one of the reasons for the decline in Honda's sales in China.

In June, for example, Honda's highest-selling model in China was the Honda CR-V, with 16600, Accord with 12000, and the rest with less than 10,000, followed by Haoying (8841), Civic (6589) and Xingge (6000).

Of course, Honda's performance in China is not an isolated case, but a microcosm of many Japanese joint ventures. In the past, Japanese car companies once crushed their own brands, but with the reform of the car market, domestic electric vehicles have entered a stage of rapid development. New energy head brands represented by BYD are rapidly eroding the market share of fuel vehicles, especially joint venture fuel cars. under this background, Japanese car companies are facing tremendous competitive pressure, and the situation of "not worrying about selling" and "lying down and winning" of Japanese cars is gone forever.

Auto Industry concern believes that with the sharp decline in the market share of fuel vehicles, joint venture brands with fuel vehicles as the main sales force are facing the problems of declining sales and overcapacity, and it may only be a matter of time before joint venture car companies, including Japanese brands, do not seize time to accelerate the electrification process.

Honda's closure of two factories in China is actually an attempt to survive. In recent years, a number of car companies have begun to sell their factories, and the shutdown has also been staged in the joint venture sector. Honda plans to make up for the reduction through two new electric car plants under construction in joint ventures with Guangzhou Automotive and Dongfeng, according to the media reports. Honda aims to start production at the two new plants later this year and is expected to restore capacity to 1.44 million vehicles.

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