Honda moves to cut China workforce with voluntary layoffs

15 May 2024 - 08:14 By Reuters
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Honda's move marks the latest setback for Japan's legacy car brands in China, where the growing dominance of local players such as BYD and a brutal price war are causing them to lose market share.
Honda's move marks the latest setback for Japan's legacy car brands in China, where the growing dominance of local players such as BYD and a brutal price war are causing them to lose market share.
Image: Brandon Bell/Getty Images

Honda is scaling down its full-time production workforce in China, with roughly 1,700 employees having agreed to leave so far, the Japanese carmaker said on Wednesday as its car sales in the world's biggest auto market decline.

GAC Honda Automobile, a joint venture (JV) between Honda and Chinese state-owned carmaker Guangzhou Automobile Group, told workers earlier this month it was seeking to make voluntary layoffs, a Honda spokesperson said.

Honda's move marks the latest setback for Japan's legacy car brands in China, where the growing dominance of local players such as BYD and a brutal price war are causing them to lose market share.

Chinese consumers are shifting away from internal combustion engine cars to electric vehicles and plug-in hybrids, segments in which Japanese brands struggle to compete with local rivals.

The Honda venture's roughly 1,700 workers who agreed to voluntarily retirement amount to 14% of its production staff, according to the spokesperson.

The venture is considering how many workers it will accept voluntary retirement, the spokesperson said, adding the final figure may be different to the 1,700 workers who asked to leave so far.

Honda operates four factories in China through the venture that traces its roots to the late 1990s, and three other factories through another JV with Dongfeng it set up in 2004.

Passenger vehicle sales in China, the world's biggest auto market, fell 5.8% in April from a year earlier, according to data from the China Passenger Car Association, amid intensifying price competition and consumers' caution about spending on big items during a shaky economic recovery.


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