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The rapid development of China's new energy vehicle industry has promoted domestic brands to increase investment in new energy vehicles, and the brand competitiveness has gradually increased. Since 2024, China's auto market has set off a fierce "price war", with domestic brands involuting to compete for market share, while the market competition pressure of joint venture brands has increased, and the living space has been continuously squeezed. Against this backdrop, joint venture brands have had to adjust their development strategies in China to cope with the current severe challenges.
Nikkei Chinese news, local time on Thursday, Honda Motor Company announced that it will cut gasoline vehicle production capacity in China, the world's largest automobile market, by 3%. The company will reduce production capacity by about 500,000 units through the closure of its plants, which is equivalent to 10% of Honda's global production. Hino Motors will withdraw from engine production in China. Due to the downturn in Japanese cars in China, Japan Steel plans to significantly reduce its production capacity in China, and the trend of comprehensive adjustment of the automotive supply chain is gradually expanding.
At present, Honda has seven gasoline vehicle plants in the Chinese market, with an annual production capacity of about 1.49 million units, and Honda plans to reduce the number of gasoline vehicles in China to 1 million, which is close to 500,000 units, equivalent to one-third of China's production capacity. As a first step, it has been reported that Honda will close or stop production of two of its seven gasoline vehicle plants in China. The plant in Guangzhou, Guangdong Province, will be closed in October, and the plant in Wuhan, Hubei Province, will be shut down from November. Another factory in Guangzhou will also be closed or suspended.
According to the report, Honda's global annual production capacity is close to 5 million units. Since the 1990s, Honda has been investing heavily in production in China. Currently, Honda's production capacity in China exceeds that of less than 1 million vehicles in the United States, making China its largest production base in the world. This is the first time that Honda has reduced production in China, which will also be the largest reduction among Japan automakers, which means that it will change its expansion route.
In fact, since the beginning of this year, Honda's sales in China have repeatedly shown a "decline". According to official data, Honda's sales in China increased by 57.28% year-on-year to 100,960 units in January this year, and sales from February to June fell by double digits year-on-year, down 38.63%, 26.32%, 22.18%, 34.66%, and 39.04% respectively. From January to June 2024, Honda's terminal vehicle sales were 415906 units, down 21.48% year-on-year.
Looking back at the development of the automotive industry in China from "Honda will reduce production capacity of gasoline vehicles in China":
-- The overall situation of China's auto market
According to the data disclosed by OICA statistics, from 2012 to 2021, global and Chinese automobile production are fluctuating, and the global and Chinese automobile production trends are basically the same before 2019, but in 2020, when global automobile production declines significantly, China's automobile production maintains a level with a small gap with 2019. From 2021 to 2022, China's auto production has rebounded. In 2022, China's automobile production reached 27.011 million units.
The automobile market has entered the "stock era", and the competition is becoming more and more fierce. After 2018, China's auto sales showed negative growth for three consecutive years, and the auto market entered the "stock era". Judging from the sales of automobiles in mainland China in recent years, the overall sales of new cars in mainland China show a phenomenon of "short-term fluctuations, medium and long-term upwards", with an average annual growth rate of about 2%~3%.
-- The passenger car market
Since 2017, the purchase tax incentives have led to sluggish growth in production and sales. In 2018, China's passenger car market experienced negative growth in both production and sales for the first time. Affected by the epidemic in 2020, the annual production of passenger cars in mainland China reached 19.994 million units, a year-on-year decrease of 6.4%; Sales volume was 20.178 million units, down 5.9% year-on-year.
In 2021, China's passenger car production and sales were 21.408 million units and 21.482 million units, respectively, an increase of 7.1% and 6.5% from 2020, ending a three-year downward trend since 2018. From January to November 2022, China's passenger vehicle production and sales reached 21.702 million units and 21.292 million units, up 14.7% and 11.5% y/y, respectively, with the cumulative growth slowing down.
Among the passenger cars of all brands, Chinese brand passenger cars performed well, with a total sales of 9.543 million units, a year-on-year increase of 23.1%.
Germany automotive economics experts assert that "the future of automobile development is in China". Wei Jianguo, former vice minister of the Ministry of Commerce and member of the senior expert advisory committee of the China Center for International Economic Exchanges, further pointed out that China's new energy vehicles are not only the confidence and hope of the recovery of the global manufacturing industry, but also will lead the development of the global manufacturing industry in the next 10 years.
Zhu Yanfeng, former chairman of Dongfeng Group, believes that pure fuel power will basically not exist, and the future will be hybrid, but the way, degree and mode of hybrid are different. He predicts that after 2030, pure fuel vehicles may basically disappear and be replaced by pure electric, hydrogen or hybrid models.
Prospective Economist APP Information Group
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