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Honda wants to cut its Chinese workforce with voluntary layoffs

Honda is cutting back on its full-time manufacturing workforce in China, with about 1,700 employees so far agreeing to leave, the Japanese automaker said Wednesday, as car sales in the world’s largest car market decline.

GAC Honda Automobile, a joint venture between Honda and Chinese state-owned automaker Guangzhou Automobile Group, told employees earlier this month that it was voluntarily resigning, a Honda spokesman said.

Honda’s move marks the latest setback for Japanese car brands in China, where the growing dominance of local players such as BYD and a brutal price war are causing them to lose market share.

Chinese consumers are shifting from combustion engine cars to electric vehicles and plug-in hybrids, segments where Japanese brands are struggling to compete with local rivals.

The approximately 1,700 Honda company employees who agreed to voluntarily retire represent 14% of the production workforce, according to the spokesperson.

The company is considering the number of employees it will retire voluntarily, the spokesperson said, adding that the final figure could ultimately be different from the 1,700 employees who have asked to leave so far.

Honda operates four factories in China through the venture, which traces its roots to the late 1990s, and three other factories through another joint venture with Dongfeng established in 2004.

Passenger car sales in China, the world’s largest auto market, fell 5.8% in April from a year earlier, according to data from the China Passenger Car Association, amid increasing price competition and consumers’ caution about spending of major items during a shaky economic recovery.

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