Honda Korea undergoes restructuring for the first time in 25 years... 900 employees laid off

Japanese Auto Companies Accelerate 탈중국 Shift

Guangqi Honda, a joint venture of Japan's Honda in China, has carried out a large-scale restructuring 25 years after entering the Chinese market. This is due to deteriorating performance caused by a sharp decline in sales of its main product, internal combustion engine vehicles, amid delays in the launch of electric vehicles.

According to Chinese economic media Caixin on the 4th, Guangqi Honda recently laid off 900 employees. Established in 1998, the company is a joint venture with 50% ownership each by China's automobile manufacturer Guangzhou Automobile Group and Japan's Honda. This large-scale layoff is the first since the company's establishment.

Caixin pointed out, "Guangqi Honda, a giant in the internal combustion vehicle sector, produces and sells more than 10 million vehicles annually, most of which are internal combustion vehicles," adding, "It has declined as new energy vehicles rapidly dominate the market."

According to the company, Guangqi Honda's sales deteriorated with a 3.17% decrease in 2021 compared to the previous year and a 4.93% decrease in 2022. This year, up to October, it produced a cumulative total of 520,500 vehicles, which is 134,400 units (20%) less than the same period last year.

Honda has recognized the necessity of launching new energy vehicles including electric vehicles and announced in 2021 that from 2030 onwards, it would focus on pure electric and hybrid models and would not launch internal combustion vehicles in China. However, Caixin pointed out that so far, Guangqi Honda's only pure electric vehicle model is the 'e:NP1.' It also explained that the cumulative sales of this model have not even reached 5,000 units, and other hybrid models, e:PHEV and e:PHEV, are also experiencing sluggish sales.

Caixin evaluated, "The decline in Guangqi Honda's sales is due to the slow pace of smartization and failure to meet the rapidly changing demands of Chinese consumers," adding, "Guangqi Honda's new vehicles were developed based on consumer survey results from three years ago." Regarding the recent layoffs, it added, "Besides the sales decline, there are reasons related to product structure changes and automation of production lines," and further explained, "Past talents were not suitable for the requirements of new product production, so the company must have replaced them."

Joint ventures of Japanese automobile manufacturers in China are facing overall difficulties. This year alone, Toyota and Honda have successively announced layoffs and production cuts. Earlier in July, the joint venture between Guangzhou Automobile and Toyota laid off 1,000 employees. According to major foreign media, the joint venture between DiDi Auto and Toyota also recently announced a partial production halt at its Tianjin plant.