As the largest Japanese joint venture brand in China,HondaCreated an extremely dazzling and brilliant record.

However, things change over time. With sales continuing to plummet, Honda had to close several factories in China and cut its production capacity by 490,000 vehicles.How long Honda can last in China, only time can tell.

1. Closing the factory will reduce production capacity by 490,000 vehicles?

In the past, Honda was almost a "god-like existence" in the Chinese market, and many Chinese people admired "Honda Dharma" very much.

However, Honda's performance in China has plummeted, and it has even reached the miserable situation of closing its factories.

According to reports from Reuters, Nikkei and other media, Honda will reduce its production capacity in China from 1.49 million vehicles to 1 million vehicles by closing factories and other measures.

This reduction is equivalent to 30% of Honda's production capacity in China and 10% of its global production capacity. Honda's production cuts will set a record for the largest scale among Japanese automakers.

As a first step in reducing production, Honda recently announced that it will close or stop production at two of its seven gasoline vehicle factories in China.

Among them, a factory of GAC Honda in Guangzhou will be closed in October. The factory was built 20 years ago and mainly produces B-class cars.Accord, with an annual production capacity of 50,000 vehicles.

In May this year, GAC Honda launched a large-scale layoff operation, and it is reported that 2,300 employees have left.

In addition, Dongfeng Honda's factory in Wuhan will stop production from November. The annual production capacity of the factory is 240,000 vehicles. After the adjustment, Honda's automobile production capacity in China has been reduced to 1.2 million vehicles.

2. Sales volume plummeted by nearly 400,000 vehicles in three years?

Behind the drastic reduction in production capacity is the fact that Honda’s sales in China have gone from glory to decline.Honda,Toyota、NissanAmong these three Japanese giants, Honda was the first to enter China and establish a joint venture.

In 1998, Honda andGuangzhou AutomobileThe joint venture GAC Honda was established; in 2003, the second joint venture Dongfeng Honda was also born.

WithFit、CR-V、Accord、OdysseyWith phenomenal models such as the first and the second, Honda is highly favored by Chinese consumers and its sales are rising steadily.

In 2020, Honda sold 1.627 million vehicles in China, surpassing Toyota and Nissan to become the most powerful Japanese car brand in China.

Unfortunately, due to the drastic changes in the market environment, Honda's performance in China has begun to decline, with sales getting worse year by year.

From 2021 to 2023, Honda's sales in China fell to 1.5615 million, 1.3731 million, and 1.2342 million units, respectively. Obviously, in just three years, Honda's sales in China plummeted by nearly 400,000 units, a year-on-year decline of more than 23%.

As 2024 begins, Honda's sales situation continues to deteriorate.In June this year, Honda's sales in China were less than 70,000 vehicles, a year-on-year decrease of nearly 40%.In the first half of this year, Honda's cumulative sales in China were only 415,900 vehicles, a year-on-year decrease of 21.5%.

At the same time, Honda's revenue in China has also been declining year by year.

3. Has the largest Japanese joint venture brand fallen from grace?

In China, the world's largest automobile market, Honda, once the largest Japanese joint venture brand, went from unparalleled glory to fall from the altar in just three or four years, which is truly a cause for regret.

The most fundamental reason behind this is thatBYDUnder the impact of new energy vehicles from Chinese local brands, the core selling points of traditional Japanese fuel vehicles such as Honda have gradually disappeared and have been eliminated by the times.

As for the development of new energy, Honda has been stubborn in promoting oil-electric hybrid technology in the past, but neglected the research and development of pure electric and plug-in hybrid technology, resulting in its new energy vehicle products lagging far behind in competition with Chinese brands such as BYD.

However, Honda did not give up, but began to accelerate its electrification transformation in order to win a second spring in the Chinese market.

For example, Honda's current production cuts are actually a strategic adjustment of its production capacity to promote electrification transformation. While closing several factories to reduce the production of fuel vehicles, Honda is also investing in building new energy vehicle factories in China.

Among them, Dongfeng Honda’s new new energy factory will be put into production in September this year; GAC Honda’s new new energy factory will be put into production in November this year.

By then, Honda's annual production capacity in China will be restored to 1.44 million vehicles.

As pioneers, Chinese new energy brands such as BYD have not only broken through the technological blockade and patent barriers of developed countries such as Europe, the United States, Japan and South Korea, and possess core technologies of the entire industrial chain such as the "three electrics" of new energy vehicles, but also have the right to define and price new energy vehicle products.

Although Honda and other automakers hope to cope with the sales difficulties by reducing production of fuel vehicles and focusing on electric vehicles, as competition in China's new energy vehicle market becomes increasingly fierce, the task of Japanese car transformation remains quite arduous.

We will have to wait and see what Honda's future in China will be like.