Honda Motor will close a factory in China and stop producing vehicles at another, the automaker announced Thursday, as it looks to produce more electric vehicles amid fierce competition from Chinese brands.
Honda will close a factory operated through a joint venture (JV) with Chinese state-owned automaker Guangzhou Automobile Group in October, a company spokesman said.
The automaker produces the Accord sedan model at the plant, which opened nearly two decades ago and has an annual production capacity of 50,000 vehicles.
Honda will halt production at another plant in China, which it operates through a separate joint venture with Dongfeng, starting in November, the spokesman said, adding that the plant has an annual production capacity of 240,000 vehicles.
Honda aims to optimize its production in China with the changes, the spokesman said, adding that the company is facing difficult conditions in the Chinese auto market, the world’s largest.
The company’s annual production capacity in China will shrink from 1.49 million to 1.2 million vehicles as a result of the production cuts, the spokesman said.
The company plans to bring production back to 1.44 million vehicles by starting production at two EV factories it is currently building through its JVs with GAC and Dongfeng. The company aims to start production at both new factories later this year.
Chinese automakers have made great strides in winning over domestic consumers with inexpensive vehicles loaded with software.
Honda and Nissan Motor are among the Japanese brands for which China has historically been a strong sales market but which are now being hit hard by the rise of domestic automakers.
Nissan and Honda said in March that they were considering a strategic partnership to collaborate on the production of EV components and artificial intelligence in automotive software platforms.
