Honda to Close Two Gasoline Car Factories in China, Sales Drop by One Million Vehicles in Five Years
Due to continued sluggish sales in China, Honda has decided to close one gasoline car factory each in Guangzhou and Wuhan, significantly reducing its gasoline car production capacity in China. This closure involves Honda's two joint ventures, GAC Honda and Dongfeng Honda. The GAC Honda factory is planned to cease production in June 2026, while the Dongfeng Honda factory will stop production in 2027. A total of two out of four gasoline car factories will be closed. The significant decline in sales is the core reason for this production capacity reduction.
Honda's sales in China reached a peak of 1.627 million vehicles in 2020, and have declined for five consecutive years, falling to 645,300 vehicles in 2025, a decrease of nearly one million vehicles compared to the peak. In the first quarter of 2026, sales were only 122,000 vehicles, with a weak market recovery.
In terms of production capacity, Honda's current annual production capacity in China has decreased to 1.2 million vehicles. After this adjustment, the total production capacity will be further reduced to 720,000 vehicles, with a factory operating rate of only about 50%, and a serious underutilization of production capacity.
To adapt to the electrification transformation, Honda has already established two dedicated electric vehicle factories in Guangzhou and Wuhan, each with an annual production capacity of 120,000 vehicles.
The future R&D system will also be adjusted. It is planned to start production of pure electric and plug-in hybrid models led by GAC and Dongfeng at the two electric factories starting in 2028, increasing cooperation with local technology and supply chains to catch up with the pace of industry transformation.
Behind this adjustment is Honda's business pressure.
In March, Honda announced an adjustment to its electrification strategy, with expected losses of up to 108.2 billion yuan. It may face its first annual net loss since its listing in fiscal year 2025, with a scale between 18.2 billion and 30 billion yuan.