Japan's second largest automaker, Honda, will shut down two internal combustion vehicle factories in China and reduce its annual production capacity in the country to 720,000 units.
Reuters, quoting Japan's Toyo Keizai magazine on Friday, reported that Honda will close a factory operated in joint venture with GAC Group this June, and will close another factory in joint venture with Dongfeng Motor Group next year.
Last month, Honda announced plans to write down its Chinese business assets as part of a broader strategic overhaul of its electric vehicle strategy, with related restructuring costs reaching up to $15.7 billion (about 62.1 billion ringgit).
These expenses are expected to lead to Honda's first annual loss since its listing nearly 70 years ago.
In the Chinese market, Honda has struggled to compete with local rivals like BYD in the fields of electrification and software-driven vehicles. Its 2025 sales in China have dropped about 24% year-on-year, falling to less than 647,000 units.