Honda plans to close at least one gasoline-powered car plant in China and may temporarily halt another facility. This comes as the automaker struggles against fast-growing electric vehicle rivals like BYD.

Sources familiar with the matter indicate Honda will reduce gasoline car production in China. This involves closing a joint venture plant this year, with a potential second closure next year. Specifically, Honda will cease operations at one of its two gasoline car plants, a joint venture with Guangzhou Automobile Group (GAC), starting in June. The automaker is also considering temporarily halting another plant, a joint venture with Dongfeng Motor Group, next year. The sources requested anonymity as the information remains unannounced.

This move signals a shrinking presence for Honda in a key market. Traditional automakers are losing their edge to Chinese EV manufacturers, forcing them to scale back internal combustion engine-related operations.

Honda stated it has not yet announced this information and declined further comment. GAC and Dongfeng have not responded to requests for comment. Earlier, Japanese magazine Toyo Keizai reported Honda's plan to close both plants.

Inside a Honda plant in China. Photo: Economic Times

Honda currently operates six plants in China through two joint ventures. Each joint venture includes two internal combustion engine plants, each with an annual capacity of approximately 240,000 vehicles, plus a smaller EV production facility. Closing one internal combustion engine plant in each joint venture would halve Honda's gasoline car capacity in China, reducing it from 960,000 to approximately 480,000 vehicles annually. This would also cut the total market capacity from about 1.2 million to 720,000 vehicles each year.

This downsizing follows Honda's announcement to adjust the valuation of its China business as part of an EV strategy restructuring. The plan could incur costs up to 15.7 billion USD. Such an expenditure might lead Honda to report its first annual loss in nearly 70 years since its listing.

Honda faces significant challenges in China's EV market. In 2025, its sales in the country dropped by approximately 24% year-on-year, falling below 647,000 vehicles. This figure is nearly half of the over 1.2 million vehicles sold in 2023. Prior to this, Honda had already reduced its production capacity in China from 1.49 million to 1.2 million vehicles annually.

A source revealed that Honda's EV plants in Guangzhou and Wuhan will commence production of electric and plug-in hybrid vehicles. These models, developed by Chinese joint venture partners, are slated for production from 2028 onwards. Concurrently, GAC and Dongfeng are increasing exports of China-made vehicles to markets including Europe, Southeast Asia, the Middle East, and Africa, targeting a significant rise in international sales this year.

Ho Tan (Economic Times)