Honda Motor will cut annual vehicle production in China by 50,000 units, Kyodo News reported on July 25, citing a company official.
This is the first such reduction in China, the automaker’s largest production base.
Honda produces 1.49 million vehicles a year in China. While it plans to increase production of electric vehicles by 240,000 units, the automaker will cut production of 290,000 gasoline vehicles, reducing the company’s overall production capacity.
The Japanese automaker will halt production at one of the plants of GAC Honda Automobile Co. and Dongfeng Honda Automobile Co., its joint ventures with local automakers, around October and November, respectively.
The latest developments highlight the plight of Japanese carmakers in China, where their sales are plummeting due to intensifying price competition and the growing popularity of locally made electric vehicles.
Sources familiar with the situation said in June that Nissan Motor Co. decided to close its passenger car plant in Jiangsu province, and Mitsubishi Motors Corp. stopped producing cars in the country last year.
The downward trend has implications beyond the auto industry. Earlier this week, Nippon Steel Corp. said it would dissolve its joint venture with Chinese steelmaker Baoshan Iron & Steel Co. to reduce steel production in China amid declining Japanese car sales there.
China has been Honda’s largest manufacturing hub, with production capacity of about 5 million units worldwide. The planned cuts are part of a broader effort to overhaul manufacturing capacity in the Asian region, which also included offering early retirement packages in May to trim some of the workforce.
The Japanese automaker is trying to turn the tide by focusing more resources on electric vehicles and cutting production of gasoline-powered vehicles.
Source: Rossa Primavera
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