Honda Motor(US:HMC) 日经中文网·2025-03-11 03:00Core Viewpoint - Honda is significantly reducing its engine production capacity in China, shifting focus towards electric vehicle (EV) development in response to the rapid growth of EVs in the market [1][2][3]. Group 1: Production Capacity Changes - Honda's engine factory in Guangzhou will cut its annual production capacity from 520,000 units to 260,000 units, which represents 30% of the cars sold in China that are equipped with engines [1]. - The overall production capacity in China will decrease from 1.49 million units at the beginning of 2024 to 960,000 units [2]. - Honda has already halted production at one of its engine assembly plants, which had an annual output of 240,000 units, and is offering voluntary departures to employees at two other plants [1][2]. Group 2: Shift to Electric Vehicles - Honda plans to launch its first dedicated EV factory in Wuhan, Hubei Province, in 2024, and another dedicated factory in Guangzhou, ensuring an annual production capacity of 240,000 EVs [2][3]. - The company aims for 70% of its new models in 2024 to be electric vehicles, with expectations that this percentage will increase by approximately 10 percentage points in 2025 [4]. Group 3: Software Development and Innovation - Honda will establish a new organization in April 2024 in China focused on automotive intelligence and software development to enhance its EV competitiveness [3]. - The company is advancing the development of software-defined vehicles (SDVs) and plans to incorporate technologies from local firms like Huawei and iFlytek into its new EV brand "Yue" [3][4]. Group 4: Market Challenges and Competition - Honda's sales in China have dropped significantly, with 2024 sales projected at 850,000 units, a one-third decrease from 2023, marking a return to below 1 million units for the first time in nine years [2]. - The price competition in the EV market is intense, with local companies like BYD performing strongly, leading to a 13% price drop for engine vehicles, which exceeds the 8% drop for new energy vehicles [4][5].