COLLATERAL injury in China’s automotive manufacturing house continues because the world’s largest automobile market quickly strikes away from ICE-powered autos to completely electrical.
The state of affairs is exacerbated by fierce competitors for gross sales and too many “gamers” that has brought about rampant cutthroat discounting at manufacturing by means of to retail ranges with Honda the newest to really feel the consequences as JV accomplice Dongfeng Motor strikes to extricate itself from their association.
The 2 had been in 50:50 partnership for 27 years by way of Dongfeng Honda Engine firm however the risky state of the home Chinese language automobile market, particularly its swing away from ICE, has prompted the state-owned Dongfeng Motor to promote (record) its 50 per cent stake within the Guangzhou-based JV with Honda.
The engine firm, which employs 827 staff, misplaced tens of millions final yr with amassed money owed approaching $A720 million.
Dongfeng can be grappling with an enormous gross sales stoop as volumes have greater than halved in eight years from 3.8 million items in 2016 to 1.5 million in 2024 because of competitors and certain unpopular automobiles.
In a report, Automotive Information stated Dongfeng listed its stake on the market on the Guangdong United Property and Fairness Change on 18 August, in accordance with the change web site.
A reserve worth has but to be set, and the itemizing deadline is 12 September.
Honda could now discover itself linked to a different shareholder if Dongfeng finds a purchaser for its stake assuming Honda desires to proceed making ICE in China which, at this stage is unclear significantly given the rising unpopularity of combustion engine autos in that nation.
Automotive Information reported the Japanese producer’s “determined try” to stem to movement of purple ink by slashing manufacturing capability on the Guangzhou engine plant by half earlier within the yr (in accordance with media studies) and arrange an EV manufacturing line in the identical metropolis with one other Chinese language automaker accomplice, which began operations late final yr.
Different results from the extremely aggressive Chinese language home market are being felt proper down by means of the native degree the place the hunt to maneuver steel has develop into so fierce that it’s rumoured half of the nation’s dealerships operated at a loss within the first six months of this yr.
The report highlights how cutthroat the Chinese language market has develop into in its fast-paced shift to electrical autos with Japanese manufacturers together with: Honda, Toyota and Nissan caught “flatfooted” now going through the robust activity of attempting to make up floor misplaced to standard home Chinese language manufacturers resembling BYD.
Different “outdoors” automakers who entered China with JVs years in the past are additionally on tenterhooks and on the lookout for new instructions numbered amongst them Volkswagen and Stellantis.
With an overabundance of gamers all chasing a slice of the brand new car pie within the Chinese language market, the state of affairs shouldn’t be tipped to ease any time quickly.
