Honda Cuts China Production by 30%... Continued Reduction Amid Japanese Car Slump

Production Cut by 500,000 Units... 10% Reduction in Global Production Capacity
Hino, Nissan, Mitsubishi, and Nippon Steel Also Scale Down in China

Recently, as Japanese companies have been consecutively reducing automobile production in China, Honda has also joined the trend. Honda plans to cut its internal combustion engine vehicle production capacity in China by 30%.

On the 25th, Nihon Keizai Shimbun (Nikkei) reported that Honda will close 3 out of 7 production lines in China.

[Image source=Reuters Yonhap News]

Through this, Honda will adjust its internal combustion engine vehicle production capacity in China from 1.49 million units to 1 million units. This represents a 30% reduction in internal combustion engine vehicle production in China. Based on global production volume, it is a 10% decrease. Nikkei stated, "This is the largest scale of production cuts among Japanese companies amid a clear downturn in China."

According to Nikkei, Honda plans to make this decision within the year through consultations with its joint ventures, China Guangzhou Automobile Group and Dongfeng Motor Group.

Honda has been strengthening its production investments in China since the 1990s. Once popular for its high quality, it has entered a supply chain review after losing out in price competition against Chinese manufacturers leveraging government support for electric vehicles and low prices. According to Nikkei, Honda's sales last month decreased by 40%.

Honda is not alone. Hino Motors plans to liquidate its China engine production subsidiary, Shanghai Hino Engine, by next year. Shanghai Hino Engine started in 2003 as a joint venture with a local company and has been producing diesel engines for local trucks and construction machinery. However, it is struggling due to aggressive competition from local companies.

Nissan Motor closed its internal combustion engine plant in Jiangsu Province last month, reducing its production capacity in China by 10%. Since the plant utilization rate in China remains around 50%, indicating overproduction, it has begun reviewing additional plant closures, Nikkei reported. Mitsubishi Motors withdrew from China last year.

In the first half of this year, Toyota Motor, Nissan Motor, and Honda sold 1.54 million complete vehicles in China, a 13% decrease compared to the same period last year.

As automobile companies struggle, the entire supply chain is being affected. Nippon Steel is selling all its shares in BNA, an automotive steel sheet manufacturer established as a joint venture with China Baoshan Steel, to Baoshan Steel. Additionally, it has decided not to renew the joint venture contract with Baoshan Steel, which ends this summer. Nikkei analyzed that the background of this decision includes the Japanese automobile industry's difficulties in China and the US-China confrontation.

This content was produced with the assistance of AI translation services.