HONDA Motor is slashing jobs and has paused production at three of its 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, according to local media reports. The staff optimisation is part of a strategy to ensure sustainable operations and speed up its transition to electric vehicles (EVs), Dongfeng Honda said on Tuesday (Sep 10).
Production at three plants has been suspended for about two weeks from Aug 26 to reduce inventory, Honda said on Wednesday.
Honda declined to comment on the job cuts, while Dongfeng did not immediately respond to requests for comment on Wednesday.
The automobile industry’s rapid transition towards EVs and fierce competition in China have hurt sales and earnings of foreign automakers, including Japanese, American and German. Honda’s China sales plummeted 21.48 per cent in the first half of 2024.
To move towards electrification, Honda will reduce the production of petrol 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. The sales of conventional petrol cars fell by 15 per cent in the first eight months of this year, according to the China Passenger Car Association. BLOOMBERG
