Honda Accelerates EV Shift in China: Closes Two ICE Plants, Cuts Annual Capacity to 720,000 Units

Honda has decided to shut down one gasoline-powered vehicle plant each at GAC Honda in Guangzhou and Dongfeng Honda in Wuhan, due to persistently declining sales in China. The Guangzhou plant is scheduled to cease production in June 2026, followed by the Wuhan facility in 2027. Following this adjustment, Honda’s number of gasoline vehicle plants in China will be reduced from four to two, cutting its total annual production capacity from the current 1.2 million units to 720,000 units. Honda’s China sales peaked at 1.627 million vehicles in 2020 but have declined for five consecutive years since then, falling to 645,300 units in 2025. In the first quarter of 2026 alone, sales plummeted further to just 122,000 units, leaving its factories operating at an average utilization rate of roughly 50%—a severe underutilization of capacity. To accelerate its electrification transition, Honda has already built dedicated EV plants in both Guangzhou and Wuhan, each with an annual capacity of 120,000 units. Starting in 2028, these electric vehicle facilities will produce battery-electric and plug-in hybrid models primarily developed by GAC and Dongfeng, respectively, while also strengthening local R&D capabilities and supply chain collaboration. This strategic overhaul comes with significant financial strain. Honda estimates related losses could reach as high as RMB 108.2 billion. For fiscal year 2025, the company anticipates recording its first annual net loss since going public, projected to range between RMB 18.2 billion and RMB 30 billion.