Honda Sales Plunge Nearly 60 Percent in Last 4 Years

JAKARTA - Honda has reaffirmed its commitment to remain competitive in the Chinese automotive market despite its sales continuing to decline in recent years. It is recorded that their vehicle sales have declined by almost 60 percent in the past four years.

Reported by Carscoops, Thursday, July 23, the Japanese manufacturer also chose to extend its joint venture with Guangzhou Automobile Group (GAC) for another 10 years. As a result, the partnership, which originally ended in 2028, will now last until 2038.

Honda and GAC collaboration has been running since 1999. For more than two decades, both companies have produced and marketed more than 11 million vehicles in China. The extension of this cooperation is a signal that Honda still sees long-term opportunities in the world's largest automotive market, including when the transition to electric vehicles is expected to mature.

This step was taken amid Honda's declining sales performance in China. In 2020, Honda's combined sales through its two local partners, GAC and Dongfeng, still reached around 1.62 million units. However, throughout last year, the figure dropped drastically to around 640,000 units.

Of that number, around 340,000 units come from GAC Honda, while the rest are contributed by Dongfeng Honda. A Honda spokesperson told Nikkei Asia the reason for the extension of the cooperation.

"Although it takes a certain amount of time for business continuity, the Chinese automotive market is changing rapidly, and we have made this decision to assess the business environment," he said.

However, maintaining cooperation with GAC does not mean that Honda's path to recovery will be easy. Competition in the Chinese automotive market is getting tighter, especially as local manufacturers continue to strengthen their position by offering high-tech vehicles and more competitive prices.

On the other hand, demand for domestic brands is also increasing. To answer this challenge, Honda must present products that can compete in terms of technology and price. In 2024, the company launched the Ye electric vehicle line in China, including the P7 model produced jointly with GAC and the S7 resulting from a collaboration with Dongfeng.

Despite having a different design and character compared to Honda models in the Western market, both electric vehicles have not been able to attract consumers significantly. This condition is a homework for Honda to present the next generation of products that are more in line with the needs of the Chinese market.