Honda cuts jobs in China, suspends output at 3 plants

Honda Motor Co. is slashing jobs and has paused production at three of its assembly plants in China, as it seeks to trim inventories and work on a broader shift in strategy in the world’s largest car market.

The Japanese automaker offered redundancy packages to more than 2,000 workers at its joint venture with China’s state-owned Dongfeng Motor Group Co., according to local media reports. The staff optimization is part of a strategy to ensure sustainable operations and speed up a transition to electric vehicles, Dongfeng Honda said in a statement via social media on Sept. 10.

Production at three plants has been suspended for about two weeks from Aug 26 to reduce inventory, Honda said in an emailed statement to Bloomberg on Sept 11.

Honda declined to comment on the job cuts, while Dongfeng didn’t immediately respond to requests for comment.

The automobile industry’s rapid transition toward EVs and fierce competition in China have hurt sales and earnings of foreign automakers, including Japanese, American and German. Honda’s China sales plummeted 21 percent in the first half of 2024.

To move toward electrification, Honda will reduce production of gasoline cars. The Japanese carmaker also has another joint venture with Guangzhou Automobile Group, which also slashed workers earlier this year, according to the Chinese media.

Demand for internal combustion vehicles in China has been falling while that of EVs and hybrids continue to grow. Sales of conventional gasoline cars fell by 15 percent in the first eight months of this year, according to the China Passenger Car Association.