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Honda Motor will stop operating a gasoline-powered car plant in China from June as it seeks to regain its footing after falling behind the shift to electric vehicles. The decision highlights how weakening demand for internal-combustion models is forcing Japanese automakers to adjust production and capacity in key overseas markets.
The Huangpu plant in Guangdong province is run through a joint venture with Guangzhou Automobile Group and has a capacity of 240,000 gasoline cars per year, representing about 20% of Honda’s total Chinese output. Honda currently operates six car manufacturing plants in China via local partners, with total annual capacity of 1.2 million units, including 960,000 gasoline vehicles and 240,000 electric vehicles.
Honda is also considering closing a production line at a Dongfeng Motor plant. Combined with the Huangpu shutdown, this would cut nearly half of the company’s gasoline-car output.
Electric and plug-in hybrid vehicles account for the majority of sales in China, while demand for internal-combustion engine models is waning. Honda’s recent production and sales trends reflect this shift.
Last year, Honda produced 680,000 cars in China, down 16% from 2024 and down about 60% from the 2020 peak. Honda’s sales dropped 24% in 2025 to 640,000 units, marking the fifth consecutive year of decline.
Honda has already trimmed production capacity in response to weaker demand. The company has closed or paused production at two Guangzhou plants with total capacity of 290,000 vehicles in 2024-2025, and closed one plant in Wuhan in 2024 with capacity of 240,000 cars per year.
Although Honda opened EV plants in both cities in December 2024, the company continues to struggle to meet demand.
China had been Honda’s main profit engine. Other Japanese automakers, including Toyota Motor and Nissan Motor, have also faced declining sales as domestic rivals such as BYD rise. However, Toyota and Nissan are recovering more strongly with new electric models developed through local joint ventures.
Nissan’s sales in China last year surpassed Honda’s. Honda’s EVs are described as relatively expensive and lacking self-driving features, with interior design that is not well-suited to Chinese consumers.
Honda expects to report a net loss of 690 billion yen for the fiscal year ending March 2026, the largest on record. Losses related to Chinese joint ventures are expected to total 150 billion yen.
Honda’s difficulties in China could also spill over to other regions such as Southeast Asia. Overall sales of Honda in Thailand, Indonesia, and Malaysia continued to decline in 2025, down 17% to 210,000 units, as BYD and other Chinese rivals penetrate the market.
Southeast Asian nations have low oil reserves, and Middle East conflicts have raised concerns about fuel shortages. The shift from gasoline cars to electric vehicles could accelerate to reduce dependence on imported oil.
At a May press conference, Honda said it anticipated changing the company’s target so that all new models are electric or plug-in fuel-cell by 2040. The automaker may also rethink its development and investment plans for electric vehicles.
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