Honda undergoes major restructuring in China: Gasoline vehicle production to decrease

The dynamic changes in the Chinese automotive market in recent years have left Honda, one of the former power players, in a difficult position. The aggressive growth strategies of local and electric vehicle manufacturers, particularly BYD, have forced the Japanese giant to take significant steps. Honda has begun a restructuring process that will significantly reduce its gasoline vehicle production capacity in China.

It has been announced that production will cease entirely at one of the factories Honda operates in partnership with Guangzhou Automobile Group (GAC) starting in June. By the time 2027 arrives, operations at another facility, a joint venture with Dongfeng Motor Group, will be suspended. These developments will reduce the company's annual gasoline vehicle production in the country from 960 thousand to 480 thousand. In total, Honda's entire production capacity in China will also drop from 1.2 million units to approximately 720 thousand.

Honda, which was once a market leader in China, saw its sales decline by up to 24 percent in 2025. The company, which has lost nearly half of its 1.2 million vehicle sales from 2023, cites the growing market dominance of Chinese giants like BYD as the primary reason.

It is estimated that this restructuring decision will create a record cost of approximately 15.7 billion dollars for Honda. It is being discussed that this cost could lead to a loss for the year, potentially causing the brand to post an annual loss for the first time in 70 years.

Reducing its gasoline production lines in the face of the rise of electric vehicles, Honda has now turned its focus to 2028 and beyond, specifically toward investments in hybrid and fully electric models. The transformation process adopted by the Japanese manufacturer to survive in China and globally is expected to ignite a search for new balances in the automotive sector.