Honda Suffers 18.5% Sales Drop in Key Market, Cuts 900 Factory Jobs in China
Honda is facing the consequences of a major shift in China’s automotive industry, where the country is rapidly moving towards an electric vehicle (EV) future. According to a report by Nikkei Asia, the Japanese giant has been forced to make tough decisions, including cutting 900 jobs at its joint venture in China, GAC Honda Automobile, due to an 18.5% drop in sales.
This shift in the automotive industry in China has been driven by the rapid adoption of EVs. GAC Honda’s sales of 490,000 vehicles in the first 10 months of 2023 reflect this transition. China aims to have an all-electric vehicle market by 2035, posing a challenge to automakers like Honda that have traditionally focused on gasoline-powered and plug-in hybrid models. Competitors like the Chinese EV powerhouse, BYD, have been gaining traction in the market.
This situation mirrors the challenges faced by other Japanese automakers in China, such as Toyota Motor and Mitsubishi Motors, who have experienced production cuts and sales declines. Honda, on the other hand, has announced a significant investment of $3.4 billion in the production of electric motorcycles and mopeds throughout this decade. They plan to introduce 30 new electric models by 2030 and slash the cost of electric motorcycles by 50%, aiming to adapt to evolving consumer preferences and align with global trends steering towards electrification.
The global electric motorcycle market, valued at $30 billion in 2022, is expected to witness substantial growth in the coming years. Honda’s investment and revised sales targets of four million units by 2030 indicate their commitment to thriving in this evolving landscape. However, the transition to electric vehicles is not immediate, as the company plans to leverage existing infrastructure for internal combustion engine models before establishing dedicated electric motorcycle production plants around 2027.
In other news, China’s largest EV maker, BYD, achieved a sales record in November and surpassed Nissan. The EV firm sold over 170,000 EV units, showing its strong performance in the fast-growing EV sector.
Overall, Honda’s adaptation to the shift in the automotive market in China and its investment in electric motorcycles demonstrate its efforts to stay competitive in the evolving landscape of the automotive industry. The company is committed to offering online sales to enhance customer convenience and adapt to the changing consumer preferences.
