Dongfeng drops out from ICE joint venture with Honda
Dongfeng put its stake in the motor joint venture up for sale on the Guangdong United Assets and Equity Exchange on Monday. Bids are possible until 12 September, but a minimum price is not yet specified on the exchange’s website. It is therefore unclear what the potential sale would bring to Dongfeng.
However, it is also more than unclear how attractive the takeover is for a potential investor. Dongfeng Honda Engine, which has been manufacturing engines for Chinese Honda models in Guangzhou since 1998, is loss-making and posted a loss of 227.8 million yuan (around 27 million euros) last year. And according to the entry on the stock exchange website, the company is burdened with 3.3 billion yuan (around 392 million euros) in debt.
What’s more, sales are no longer going as planned. According to Japanese media reports, Honda reduced the production capacity of the Chinese engine plant by 50 per cent at the beginning of the year. Some Japanese manufacturers have underestimated the pace of the switch to electric cars in China and have lost market share with a combustion-heavy range.
Chinese manufacturers are also feeling the effects of the enormous sales growth of manufacturers such as BYD, Leapmotor and Li Auto, while Xpeng and Nio are also recording rising sales. Honda’s joint venture partner, Dongfeng, which also works with Nissan, only sold 1.5 million cars last year, compared to 3.8 million vehicles in 2016. There was also speculation around Dongfeng this year that a merger with Changan was imminent, but this has not materialised so far. This was triggered by restructuring measures announced almost simultaneously at both car manufacturers. By withdrawing from the Honda joint venture, Dongfeng is, in any case, shedding another part of its combustion engine business.
However, the cooperation between Honda and Dongfeng continues elsewhere: in October 2024, the two partners opened a plant for new energy vehicles with an annual capacity of 120,000 vehicles at the Wuhan plant. In China, Honda plans to launch a total of ten electric models under the Honda brand by 2027, including models from the e:N series. However, high hopes are pinned on the Ye series of electric cars, which Honda previewed in April 2024. With these models, Honda aims to become an all-electric brand in China by 2035.
This article was first published by Sebastian Schaal for electrive’s German edition.
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