Dongfeng Releases 50 Percent Of Joint Shares With Honda, What's Up?

JAKARTA - Dongfeng and Honda have been in partnership for a long time, and have even produced hundreds of thousands of cars for internal combustion engines or ICE. But the partnership will now be different.

According to a report from Carscoops, quoted Wednesday, August 20, Dongfeng decided to sell 50 percent of its shares, a move that reflects a sharp decline in traditional engine sales in China and an increasing push towards electric vehicles.

Dongfeng officially listed its shares on the Guangdong Stock Exchange (Guangdong United Assets and Equity Exchange) earlier this week. Although no reserve price has yet been set, the listing of shares has a deadline of September 12.

Details in the filing documents show that the joint venture had assets worth 5.4 billion yuan last year, along with debts of 3.3 billion yuan. The factory linked to the joint venture employs 827 employees.

The push for fast electric vehicles in China is the main reason?

Many local Chinese brands have produced innovative and competitive electric vehicles. Making Japanese car manufacturers like Honda have felt the pressure. In addition, Dongfeng faces similar difficulties, lagging behind competitors who are growing rapidly like BYD.

In fact, the company's annual sales show this clearly, down from 3.8 million vehicles in 2016 to just 1.5 million years ago, both on its own brand and a joint venture with Honda and Nissan.

It is not clear what Dongfeng Honda's next move will be. However, it is estimated that Honda may choose to acquire Dongfeng and manage its engine operations in China entirely internally, or hope that other local brands will participate in the new joint venture. For now, the Honda car production joint venture partnership with Dongfeng remains intact.

Honda Penetration In China

Honda continues to penetrate China. Earlier this year, Honda introduced a new EV specifically designed for the local market, in collaboration with Dongfeng.

At the same time, Honda also launched the GAC Honda GT through its other joint venture with the GAC Group. This suggests that although the old engine-focused model may begin to fade, the EV era has formed a new chapter of the company in China.