Honda will scale back production of gas cars in China and is planning to initiate the manufacturing of two electric vehicle (EV) plants this year.
In a significant move towards electrification, Japanese auto giant Honda is set to further its transition in China with a new dedicated Dongfeng Honda EV plant scheduled to go into production in September. This announcement comes as part of Honda's global strategy to adapt to changing market demands and environmental policies.
The news of a new EV plant follows Honda's unveiling of a new EV brand in China, marking a strategic shift in the company's approach to regain relevance in the Chinese market. In addition, two more EV plants are set to start production in September and November, respectively.
Despite the focus on electrification, Honda's retail sales in China in 2023 saw a dip of 10.12 percent year-on-year, with the company selling 1.23 million units. This decline in sales is not unique to Honda, as the overall market for gasoline vehicles in China has been experiencing a downturn due to growing consumer interest in electric and hybrid vehicles.
In response to this shift, Honda has been investing in production in China since the 1990s, making China its largest production base in the world. However, the company is now set to trim its gasoline vehicle production capacity from 1.49 million units to 1.2 million units. This reduction is the largest among Japanese carmakers, reflecting the struggles of Japanese cars in China.
GAC Honda, one of Honda's joint ventures in China, has announced plans to close its fourth production line in October 2024, which has an annual capacity of 50,000 units. Additionally, Dongfeng Honda plans to shut down its second production line in November 2024, which has an annual capacity of 240,000 units. These closures are part of Honda's capacity optimization efforts to accelerate the electrification transition in China.
Honda's strategic pivot towards hybrids is evident in its plans to launch 13 new hybrid models between 2027 and 2031, aiming to sell 2.2 million units by 2030. This focus on hybrids suggests a potential reduction in purely gasoline-powered vehicles, although the impact on China is not directly specified.
China's new energy vehicle policies could encourage Honda to adopt similar strategies in China, potentially reducing gasoline vehicle production capacity over time. The Chinese government has been a strong advocate for new energy vehicles, with policies supporting electric and hybrid vehicle development.
In conclusion, while Honda's electrification transition, particularly in China, is not specifically detailed, the focus on hybrids and eventual electrification suggests that gasoline vehicle production capacity could decrease over time as the company adapts to changing market demands and environmental policies. As the industry continues to evolve and as China maintains its focus on new energy vehicles, Honda's production capacity for gasoline vehicles in China could decrease in the coming years, although no explicit timeline has been announced.
- Honda's new Dongfeng Honda EV plant, slated to go into production in September, demonstrates the company's commitment to electrification, aligning with their global strategy to adapt to changing market demands and environmental policies.
- As part of Honda's response to the growing consumer interest in electric and hybrid vehicles in China, two more EV plants are set to commence production in September and November respectively.
- Despite the decline in Honda's retail sales in China in 2023, the company continues to invest in production in China, marking China as Honda's largest production base in the world.
- The move towards electric and hybrid vehicles in China, driven by the country's energy policies, may encourage Honda to further reduce its gasoline vehicle production capacity over time, as evidenced by their plans to launch 13 new hybrid models and the scheduled closures of various production lines in the future.
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