Honda Motor is reducing its permanent production workforce in China due to a decline in car sales in the country. This reflects the challenges faced by Japanese car brands in China, where local manufacturers like BYD are gaining dominance and price competition is intense. Additionally, Chinese consumers are showing more interest in electric vehicles and plug-in hybrids, making it difficult for Japanese brands to compete with local ones in these segments.
GAC Honda Automobile, a collaboration between Honda and Chinese state-owned automaker Guangzhou Automobile Group, has announced its intention to carry out voluntary layoffs. About 1,700 employees have chosen to leave, with 14% of them coming from the production workforce. The company is still considering the number of workers it will accept for voluntary retirement, noting that the final count may differ from the current 1,700.
Honda operates four factories in China through the GAC Honda Automobile venture and three additional factories through another joint venture with Dongfeng established in 2004. This downsizing comes at a time when China’s passenger vehicle sales have experienced a 5.8% decline compared to the previous year, attributed to price competition and consumer hesitancy amid an uncertain economic recovery.
