Honda’s sales in China fell 30.9% in 2024, totaling 852,269 units, marking the first time in nearly a decade that the Japanese automaker has sold fewer than 1 million vehicles in the country.
The decline comes amid rising competition from domestic brands and waning demand for internal combustion engine (ICE) vehicles. In response, Honda is scaling back production at its Guangdong engine plant and accelerating its transition to electric vehicles (EVs).
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China’s new energy vehicle (NEV) market—which includes battery electric vehicles (BEVs), plug-in hybrids (PHEVs), and fuel cell vehicles (FCEVs)—now accounts for 40% of all new car sales, with BYD dominating the segment. In 2024, BYD sold 3.83 million passenger cars in China, 8.5 times its 2019 sales, further eroding market share from traditional automakers like Honda.
To adapt, Honda will close a manufacturing line at the Dongfeng Honda Engine plant by the end of this month, effectively halving its annual output from 520,000 to 260,000 units, according to Nikkei Asia.
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Additionally, the company ceased production at a Guangzhou Automobile Group joint venture facility in January, eliminating 240,000 units of annual capacity. These cutbacks will reduce Honda’s total production capacity in China from 1.49 million units at the start of 2024 to 960,000 units. Reports suggest Honda is also offering early retirement packages to affected workers.
Despite the setbacks, Honda is expanding its EV lineup in China. The newly launched S7, a compact electric SUV competing with the Tesla Model Y, Onvo L60, and Zeekr 7X, features an 89.8 kWh battery with up to 404 miles (650 km) of range. Pricing starts at ¥259,900 (approximately $36,000). Honda is also developing two additional EVs: the P7, a larger crossover, and a sleek sedan based on the GT Concept unveiled last year.