Honda will reduce its gasoline vehicle production capacity in China by 290,000 units and expects two new EV plants to start production in September and November, respectively.

Japanese auto giant Honda is restructuring its vehicle production capacity in China in an attempt to adapt to the country's electrification transition.

Honda announced today that it is reducing its gasoline vehicle capacity in China by 290,000 units and expects two new electric vehicle (EV) plants to begin production in September and November, respectively.

“Honda China is implementing capacity optimization to accelerate the electrification transition,” it said in a statement posted on Weibo today.

Honda currently has seven vehicle production lines in China with a combined annual capacity of 1.49 million units, it said.

Honda plans to scale back gasoline vehicle production capacity at its two joint ventures in China, specifically:

GAC Honda plans to close its fourth production line in October 2024, which has an annual capacity of 50,000 units.

Dongfeng Honda plans to shut down its second production line in November 2024, which has an annual capacity of 240,000 units.

After the adjustments, Honda's total vehicle capacity in China will go from 1.49 million units to 1.2 million units, the Japanese carmaker said.

Honda is further accelerating its electrification transition in China, with a new dedicated Dongfeng Honda EV plant under construction set to go into production in September, and GAC Honda's new energy vehicle (NEV) plant set to go into production in November, it said.

Separately, GAC Honda's statement posted on Weibo yesterday mentioned its capacity adjustment plan.

GAC Honda currently has four vehicle production lines with a combined annual capacity of 770,000 units, as well as one production line under construction with a designed annual capacity of 120,000 units, according to the statement.

GAC Honda's fourth production line, with a capacity of 50,000 units a year, is scheduled to close in October, and an NEV production line under construction will go into operation in November, it said.

The statements come as Honda has been reported to be drastically scaling back its operations in China.

Earlier yesterday, Nikkei reported that Honda would cut capacity in China by about 500,000 vehicles, which is equivalent to 10 percent of Honda's global output, through plant closures and other moves.

Honda will trim its annual gasoline car production capacity in China to 1 million units from 1.49 million, the Nikkei report said, adding that the cuts will be the largest among Japanese carmakers as Japanese cars are clearly in the doldrums in China.

Honda has been investing in production in China since the 1990s.

Currently, Honda's production capacity in China exceeds that of less than 1 million vehicles in the US, making China its largest production base in the world, the Nikkei report noted.

This is the first time Honda has scaled back production in China, signaling a change in the expansion route it has been pursuing, the report said.

Honda sold 415,906 vehicles in China in the first half of the year, down 21.48 percent year-on-year, according to data compiled by CnEVPost.

It had retail sales of 1.23 million units in China in 2023, down 10.12 percent year-on-year.

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