Honda is set to cut engine production capacity at its plant in Guangzhou, China. According to Kyodo News on Tuesday, Honda will reduce its production lines from two to one at the Guangzhou facility, cutting its annual engine assembly capacity from 520,000 units to about half. This reduction represents approximately 30% of Honda’s gasoline engine sales in China.
This move follows Honda’s decision in January to cease operations at one of its three gasoline vehicle assembly plants run by its joint venture with Guangzhou Automobile Group (GAC). Honda has struggled to compete in the Chinese market, where electric vehicle manufacturers like BYD have gained dominance. Last year, the company’s sales in China dropped by about 30% to 850,000 units, falling below the one million mark for the first time in nine years.
In response to these challenges, Honda has been restructuring its production system in China since last year. The company has reduced its gasoline vehicle production while launching operations at a new electric vehicle plant in Hubei Province.
Meanwhile, Nissan Motor Co. is also experiencing performance issues. Instead of shutting down plants, Nissan temporarily maintained its five manufacturing plants in Japan and consolidated its production lines. Last year, the company announced plans to reduce its global workforce by 9,000 and reduce production capacity by 20%.
Honda and Nissan had been in talks to integrate their management structures under a holding company by the end of last year. However, they failed to reach an agreement and announced the collapse of the merger plans last month.
