On December 2nd, Honda announced that it would lay off approximately 900 contract workers from a joint venture in China. Subsequently, a spokesperson for GAC Honda mentioned that when referring to employees hired through dispatch agencies, "production is decreasing, and thus, dispatch contracts are terminated."
The spokesperson also revealed that this round of layoffs accounts for about 7% of GAC Honda's approximately 13,000 employees, but they declined to disclose which vehicle models' production would be reduced.
Honda, the second-largest Japanese automaker after Toyota, is currently facing strong headwinds in China. Data indicates that the company's production in China for the first ten months of this year decreased by about one-fifth compared to the same period last year.
In terms of sales, driven by robust demand in the United States, Honda sold 3.2 million vehicles globally in the first ten months of this year. However, in the Chinese market, which constitutes 30% of the total sales, Honda's sales declined by nearly one-fifth compared to the same period last year.
Coincidentally, Japan's largest automaker, Toyota, also announced the suspension of production on some older production lines in its joint ventures in China due to sluggish sales. A spokesperson for Toyota revealed in an email that the temporary halt in production at the Tianjin plant, a joint venture with China FAW, is a planned measure. The reason for stopping the production lines is to optimize the production system considering changes in the aging and model composition of the vehicles. Toyota is adjusting production based on the 'changes in the model composition.'
Jiji News Service stated that Toyota's partial production suspension is a significant production adjustment in response to sluggish sales of gasoline engine vehicles.
Similar to Honda, Toyota is also facing challenges of slowing sales in China. Data shows that while FAW Toyota's retail sales slightly increased in the cumulative total for January to October, GAC Toyota's cumulative sales dropped from 846,000 units in the same period last year to 767,000 units, a decrease of 9.3%. Insufficient deployment of electrified products is one of the core reasons why Toyota's two joint ventures in China are struggling to achieve growth in sales this year. Public information shows that Toyota's electrified models in China mainly include the bZ3 and bZ4X, and the combined sales of these two models in Toyota's two joint ventures in China account for less than 3%.
The transition from traditional internal combustion engine vehicles to electric vehicles continues to impact major automakers, and Japanese automakers have been slow to transition to electric vehicles. This impact is particularly evident in China, where electric vehicle sales are soaring. Layoffs and production cuts are part of measures taken by companies like Toyota and Honda to re-adjust their strategies and operations to remain competitive.
