Honda and Guangzhou Automobile Group (GAC) are reportedly set to close one of their joint venture plants in China by the end of June 2025. The decision comes as part of Honda’s broader restructuring efforts following a significant shift toward electric vehicles (EVs).
A second plant, operated under Honda’s joint venture with Dongfeng Motor, may also face closure due to declining sales of internal combustion engine (ICE) vehicles. The closures reflect Honda’s response to a rapidly evolving Chinese automotive market, where local EV brands are gaining dominance.
Honda’s sales in China plummeted by approximately 24% in 2025, dropping to just under 647,000 vehicles—a stark contrast to the 1.2 million units sold in 2023. The company’s total annual vehicle production capacity in China is expected to shrink from 1.2 million to around 720,000 cars annually if both plants are closed.
Impact on Honda’s Production Capacity
Honda currently operates six plants in China through its alliances with GAC and Dongfeng. Closing one ICE plant in each joint venture would halve its petrol car production capacity, reducing it from 960,000 to approximately 480,000 vehicles per year. This strategic adjustment aligns with Honda’s long-term goal of prioritizing EV production, though the transition remains challenging.
Despite these efforts, Honda’s ICE models have struggled to attract buyers. For example, GAC Honda offered a $14,610 (100,000 yuan) discount on the Accord e: PHEV to returning customers earlier this year, highlighting the competitive pressures the automaker faces.
Challenges in China’s EV Market
While Honda aims to accelerate its EV investments, the company lags behind competitors in technology and consumer preference. Local EV brands in China are better positioned with advanced software and localized features, making it difficult for Honda to regain market share quickly. The company’s restructuring, which includes a $15.7 billion investment, underscores its commitment to adapting to these market realities.
As of now, neither Honda nor its joint venture partners have officially announced the plant closures. However, industry analysts anticipate a slowdown in operations as the automaker realigns its strategy.
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