Japan’s two biggest carmakers – Toyota and Honda – announced cutbacks on Saturday to their operations in China after suffering weak sales.
The transition from gas or petrol-powered cars to electric vehicles (EVs) continues to take a toll on the auto giants, particularly in China, which has seen a rapid surge in EV sales.
Japanese automakers have been slow to shift to electric vehicles in the world’s largest car market.
Honda Motor acknowledged this on Saturday, when it said it was dismissing about 900 contract workers at a joint venture in China.
The latest move amounts to a cut of about 7% of the venture’s workforce of about 13,000, the spokesperson said, but the group declined to say which models production were being cut.
“Production volume is decreasing, so dispatch contracts are terminated in line with that,” the spokesperson said of the employees, hired through dispatch agencies, at Honda’s venture with China’s state-owned Guangzhou Automobile Group.
Toyota halts some operations in Tianjin
Toyota Motor has also halted production on some ageing lines at a joint venture in China, a spokesperson said on Saturday after a media report that it was partially suspending production due to weak sales.
The production halt at the Tianjin venture with China’s FAW was a planned move, and Toyota is adjusting production based on “changes in the composition of vehicle models”, a spokesperson said by email.
“The reason for stopping the production line was to optimize the production system in consideration of aging and changes in the composition of vehicle models such as body types.”
Japan’s Jiji news service said on Friday the world’s largest automaker by sales was suspending some production as part of a major production adjustment in response to weak sales of gasoline-engine cars.
A FAW representative did not respond to a request for comment.
A report said last month that Toyota had told dealers it would extend a plan to reduce output at the FAW venture.
Slowing sales pose a growing challenge to Toyota in China which accounted for nearly a fifth of Toyota’s worldwide sales of about 8.5 million vehicles over the first 10 months of the year, including sales of its luxury Lexus brand.
Meanwhile, Honda, which is Japan’s biggest automaker after Toyota, is also facing strong headwinds in China.
Its production there was down by about a fifth for the first 10 months of the year compared to the same period last year.
Honda sold 3.2 million vehicles worldwide in January-October, helped by robust demand in the United States. Sales in China, accounting for 30% of the total, fell nearly a fifth from a year earlier.
- Reuters with additional editing by Jim Pollard
NOTE: This report was expanded and the headline changed on December 2, 2023, with additional material on Toyota’s trimming of operations in China.