Japanese automaker Honda, once a powerhouse in China's vast auto market, is slashing production capacity by shuttering two gasoline vehicle factories in Guangzhou and Wuhan amid a brutal sales collapse that shows no signs of recovery.
According to a report by Japan's Toyo Keizai on April 17, 2026, Honda will close one plant at its GAC Honda joint venture (with Guangzhou Automobile Group) in June 2026 and another at Dongfeng Honda (with Dongfeng Motor Group) in 2027. The moves will reduce Honda's four gasoline car plants in China to two, cutting annual production capacity from the current 1.2 million units to just 720,000.
Honda currently operates six vehicle assembly plants in China through its two joint ventures. The closures target underutilized gasoline-powered facilities as the company grapples with a dramatic shift in consumer demand toward electric and plug-in hybrid vehicles dominated by aggressive Chinese rivals.
Sales data paints a grim picture. Honda's China sales peaked at a record 1.627 million units in 2020 but have declined for five consecutive years. In 2025, they fell 24.3% to 645,000 units. The slide continued into 2026, with first-quarter sales dropping 22.4% year-on-year to only 122,000 units. Factory utilization rates have sunk to around 50%, far below the levels needed for profitability.
Last month, Honda warned it would take major impairment charges on its China assets—potentially up to $15.7 billion—as part of a strategic overhaul focused on electric vehicles. Beyond factory closures, the company is restructuring its R&D operations. Sources indicate that new EV and plug-in hybrid plants in Guangzhou and Wuhan, built in 2024 with 120,000 units of combined annual capacity each, will begin producing battery-electric and PHEV models from 2028, with local partners GAC and Dongfeng taking the lead on development.
GAC Honda has responded to the reports by stating the closures are part of efforts to "integrate resources, optimize strategic layout, and improve operational efficiency" in line with market changes. Honda President Toshihiro Mibe has personally visited the Guangzhou and Wuhan sites recently, fueling speculation about future joint venture negotiations—GAC Honda's contract expires in 2028, while Dongfeng Honda's runs to 2043.
The troubles reflect broader challenges for Japanese automakers in China. Traditional gasoline models, which still make up the bulk of Honda's lineup, are losing ground rapidly to cheaper, tech-heavy EVs from domestic brands. Honda's capacity cuts follow earlier reductions, including previous idling or closures of other Guangzhou and Wuhan facilities.
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