Honda Plans to Shut One Gasoline Car Plant Each at Two China Joint Ventures; GAC Honda and Dongfeng Honda Respond Differently

Honda plans to shut down one gasoline-powered vehicle plant each at its two Chinese joint ventures—GAC Honda and Dongfeng Honda. The GAC Honda plant in Guangzhou is expected to cease production in June 2026, while the Dongfeng Honda facility in Wuhan is scheduled to close in 2027. Together, these two plants have a combined annual capacity of approximately 480,000 vehicles. If implemented, this move would reduce Honda’s total production capacity in China by about 40%. In response, GAC Honda stated that this action does not constitute a factory closure but rather a strategic realignment aimed at resource integration, optimizing its business layout, and improving operational efficiency in response to changing market conditions. A company representative clarified that the plant slated for shutdown is an older facility primarily producing the Lingpai model, which has already been discontinued. Production of currently sold models will remain unaffected, and the company emphasized its future focus on product upgrades and technological advancement. Dongfeng Honda, meanwhile, said its operations remain normal and that it currently has no plans to shut down any factories, though it acknowledged that certain production lines will be halted—not the entire facility. Data shows that Honda’s sales in China have declined for five consecutive years since peaking at 1.627 million units in 2020. Sales dropped to 645,300 units in 2025, a decline of more than 60% from the peak. In the first quarter of 2026, Honda sold 122,000 vehicles in China, down 22.43% year-over-year; March alone saw sales of just 36,200 units, a 34.34% year-over-year drop. During the same period, Honda’s total production capacity in China stood at around 1.2 million units, with actual output in 2025 reaching only 680,000 units—an operating rate below 60%, significantly under the industry’s healthy threshold. Moreover, Honda faces financial pressures globally. In March 2025, the company announced a major revision of its electric vehicle (EV) strategy, which is expected to incur substantial losses and result in a net loss for fiscal year 2025. Against this backdrop, shutting down aging gasoline-vehicle plants or production lines is seen as one measure to address overcapacity and accelerate its transition toward electrification. Notably, Honda plans to export EVs manufactured in China back to the Japanese market. If market reception proves favorable, the company may expand import volumes.