Honda Motor Corporation has made the strategic decision to eliminate 900 jobs at its joint venture, GAC Honda Automobile, in China. The move comes as Honda faces challenges in a swiftly evolving market increasingly favoring electric vehicles (EVs). GAC Honda, established in partnership with Guangzhou Automobile Group, issued layoff notices to employees in late November, impacting approximately 7% of its workforce, which stands at around 13,000.
The joint venture’s sales figures for the first 10 months of 2023 witnessed a notable decline, totaling about 490,000 vehicles and marking an 18.5% drop compared to the previous year. In response to the sales downturn, GAC Honda plans to reduce the number of contract workers hired through employment agencies at its assembly plants in Guangzhou. Adhering to local regulations, the company will provide compensation to contract workers affected by premature layoffs, in accordance with their employment contracts.
While China stands as one of Honda’s major markets, the company’s product lineup in the country is primarily composed of gasoline-powered autos and plug-in hybrids, with limited offerings in the electric vehicle segment. The shifting landscape, where China aims for all new vehicles to be electric by 2035, has posed challenges for Honda, with increasing competition from prominent electric vehicle manufacturers like BYD.
Honda’s workforce reduction in China echoes similar challenges faced by other Japanese automakers operating in the Chinese market, such as Toyota Motor, which cut around 1,000 jobs in its joint venture GAC Toyota Motor in July. Additionally, FAW Toyota Motor partially suspended production, and Mitsubishi Motors announced its exit from automobile production in China in late October, citing a substantial decline in sales volume.
