AutoBeta(AutoBeta.net)08/08 Report--

Japanese automaker Honda Motor revealed on Aug. 7 that it plans to further reduce its total car production capacity in China by 200000 vehicles, and coordination work is under way, according to several media reports. The move comes after Honda announced that it would cut production capacity by 50, 000 vehicles, a total of 250000 vehicles, due to fierce competition with local manufacturers and low sales.

As of press time, Honda officials have not yet responded to the above news, whether the above news is true or not will not be known until further official confirmation.

On July 25, the market reported that Honda will reduce fuel vehicle capacity by 30% in the Chinese market and 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.

In response, GAC Honda posted on its official Weibo that night that GAC Honda recently released a "Yun Xin Zhiyuan" corporate strategic transformation plan, which aims to create a "smarter, greener and more efficient" GAC Honda. The company currently has four vehicle production lines (annual production capacity of 770000 units) and one production line under construction (designed annual production capacity of 120000 units), of which the fourth production line with an annual production capacity of 50, 000 units is scheduled to be closed in October 2024. The new energy production line under construction will be put into production in November 2024. GAC Honda will improve the quality and efficiency of the whole link, constantly strengthen the competitiveness of enterprises, and achieve the strategic goal of "becoming the leading enterprise in the production and operation efficiency of China's automobile industry".

Subsequently, Honda China officially announced the implementation of capacity optimization to accelerate the electrification transformation. Honda currently has seven vehicle production lines in China, with a total annual production capacity of 1.49 million vehicles, it said. GAC Honda plans to close the fourth production line with an annual capacity of 50, 000 vehicles in October 2024, while Dongfeng Honda plans to shut down the second production line with an annual capacity of 240000 vehicles in November 2024. After the adjustment, the total automobile production capacity of Honda in China has changed from 1.49 million to 1.2 million.

Honda said it would further accelerate its electrification transformation in China, with Dongfeng Honda's new electric dedicated plant under construction going into production in September 2024 and Guangzhou Auto Honda's new new energy plant in November 2024. At the same time, Honda stressed: "Honda through capacity strategic adjustment, strengthen the automotive industry base, to achieve the sustainable development of the automobile industry in China."

Honda's cumulative terminal car sales in China from January to July were 468473, down 24.4 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 July compared with the same period last year, falling by 38.63%, 26.32%, 22.18%, 34.66%, 39.04% and 41.4%, 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.

On Aug. 7, Honda announced its first-quarter results. According to the financial report, Honda's first-quarter operating profit was 484.71 billion yen, estimated at 442.38 billion yen; net profit was 394.66 billion yen, up 8.7% from a year earlier, estimated at 314.88 billion yen; and net sales were 5.40 trillion yen, estimated at 5.22 trillion yen. Honda expects to sell about 2.97 million cars worldwide in the fiscal year ending March 2025.

Although Honda made good profits in the first quarter, Honda is not at ease at present, especially in the Chinese market. Eiji Fujimura, Honda's chief financial officer, said the Chinese car market was shifting to electric cars faster than expected and Honda was busy adjusting production.

It is understood that Honda plans to make up for the capacity reduction through the construction of two new electric car plants, Dongfeng Honda and Guangzhou Auto Honda, and is expected to restore capacity to 1.44 million vehicles. According to the plan, Honda's electrification in China will reach more than 50% by 2025, no new fuel cars will be put into use after 2027, and more than 10 pure electric models will be launched by 2030.

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