Honda Motor is downsizing its permanent production workforce in China. This move comes amidst a decline in car sales in the world’s largest auto market.
This decision by Honda reflects the ongoing challenges faced by Japan’s traditional car brands in China. The increasing dominance of local manufacturers such as BYD, coupled with a fierce price competition, is eroding market share for foreign brands. Additionally, Chinese consumers are gravitating towards electric vehicles and plug-in hybrids, segments where Japanese brands find it challenging to compete with their domestic counterparts.
GAC Honda Automobile, a collaboration between Honda and Chinese state-owned automaker Guangzhou Automobile Group, informed workers earlier this month about its intention to implement voluntary layoffs.
In an announcement made on Wednesday, 15 May, the Japanese automaker revealed that about 1,700 employees have opted to depart. Of these, 14 per cent represent the production workforce. The venture is currently deliberating on the number of workers it will accept for voluntary retirement. However, the company emphasised that the final tally may vary from the 1,700 workers who have expressed their desire to leave thus far.
Honda operates four factories in China through the aforementioned venture, which has its origins dating back to the late 1990s, and three additional factories through another joint venture established with Dongfeng in 2004.
In April, passenger vehicle sales in China, the world’s largest auto market, experienced a 5.8 per cent decline compared to the previous year, as reported by the China Passenger Car Association. This decrease is attributed to escalating price competition and consumer hesitancy towards significant expenditures amid an uncertain economic recovery.
