Nikkei Chinese Edition recently reported that Honda plans to cut 30 percent of gasoline vehicle production capacity in China, the world’s largest auto market. The company will reduce capacity by about 500,000 vehicles, equivalent to 10 percent of Honda’s global production, through plant closures and other measures.
In China, there is currently an excess supply capacity as production capacity by domestic automobile companies has expanded faster than demand. Moreover, there has been a large flow of very low-priced Chinese into the Southeast Asian market, where Japan has an advantage; sales competition has become increasingly fierce.
Honda had been increasing its investment in China since the 1990s. China thus became Honda’s its largest production base worldwide. Now, Japanese automakers have reached a turning point in their confrontation with China over dumping of low-priced cars, and Honda is reducing its scale in China for the first time.
According to Nikkei, all Japanese automakers and suppliers have followed the trend of “adjusting” their businesses in China. Nissan closed its gasoline vehicle plant in Jiangsu Province in June, reducing annual production capacity in China by 10 percent, with further closures of factories under consideration. Hino Motors is exiting its engine production business in China. Meanwhile, Nippon Steel is also planning a significant reduction in its production capacity within China.
Source: Nikkei Chinese, July 25, 2024
https://cn.nikkei.com/industry/icar/56235-2024-07-25-09-31-44.html