by Honda Closes Plants in China Due to Falling Sales
Following the announcement of a large-scale $15.7 billion restructuring and a review of its electric vehicle strategy, the situation for Honda in China is also deteriorating. According to recent reports, at least one of the company’s automobile plants in the country will be closed by the end of June.
Key facts of the situation:
Details on Production Shutdown
The plant in question is part of a joint venture with Guangzhou Automobile Group (GAC). This step was a result of Honda’s sales in China falling by about 24% in 2025 — to just under 647 thousand vehicles. This is almost half of the 1.2 million cars sold in 2023.
According to Reuters, another plant from Honda’s other joint venture with Dongfeng Motor may also be closed soon, as the Japanese automaker tries to keep up with the rapidly changing market.
Demand for traditional gasoline cars has significantly fallen, and local electric vehicle brands are increasingly taking market share from foreign manufacturers, creating growing pressure for them.
A Turning Point for Honda in the Chinese Market
Honda has six plants under alliances with GAC and Dongfeng, but maintaining production of ICE vehicles is becoming increasingly difficult. It is estimated that closing one ICE plant in each joint venture will halve Honda’s production capacity for gasoline cars in China — from 960 thousand to approximately 480 thousand vehicles per year. This will also reduce the company’s total annual capacity in the country from 1.2 million to about 720 thousand cars.
This follows a tough year for the automaker in China, where it recorded a sharp drop in sales. No official announcements about the closures have been made by the company or its partners yet, but analysts expect some slowdown.
Strategic Changes and Competition
Honda’s offerings for ICE vehicles have been accompanied by impressive discounts, indicating their low sales. For example, earlier this year, GAC Honda offered loyal customers a significant discount of $14,610 on the new Accord e: PHEV.
The overall picture involves a reallocation of investments towards electric vehicles. However, the growth of Honda’s electric vehicle sales in China is likely to remain slow, as competitors are already ahead in technology, and consumers increasingly prefer cars better optimized for local integration and advanced software.
These events vividly illustrate the profound transformation taking place in the global automotive market, especially in China. The rapid transition to electric vehicles and the dominance of local brands are forcing global players like Honda to adapt quickly. Scaling back traditional car production is a painful but seemingly necessary step to reorient resources towards future technologies. Success under the new conditions will depend not only on launching electric vehicles but also on the ability to offer competitive solutions in software and integration with local ecosystems, where Chinese manufacturers are now setting the tone.
