AutoBeta(AutoBeta.net)05/16 Report--

According to several media reports, GAC Honda has launched large-scale layoffs in the form of step-by-step notice since the beginning of this month, with an estimated scale of thousands of people. Insiders called it an overall layoff, involving multiple lines. At present, the internal turnover process has been started, mainly taking the initiative to quit, and there will be corresponding compensation. at present, many employees have begun to have a medical examination before leaving. Layoffs are expected to last until August, but are more concentrated in May.

In response to the layoffs, GAC Honda responded, "in order to ensure the company's sustainable operation and accelerate strategic transformation, GAC Honda will further improve personnel efficiency. Measures include some employees in the production field do not renew their labor contracts for the first time, and voluntarily negotiate to terminate their labor contracts."

This is not the first time GAC Honda has laid off staff. In December 2023, GAC Honda laid off 900 employees, the first layoff in its 25-year history. At that time, GAC Honda responded that it was labor dispatch personnel involved in layoffs, and regular employees were not affected. The reason for the layoffs is that GAC Honda is trying to transform the electric car market more quickly.

According to the official website, Guangzhou Automobile Honda was founded in July 1998 and was jointly invested by Guangzhou Automobile Group Co., Ltd., Honda Technology Research Industry Co., Ltd. and Honda Technology Research Industry (China) Investment Co., Ltd., with a share ratio of 50:40:10. Headquartered in Huangpu District, Guangzhou City, it has three factories and four vehicle production lines in Huangpu District and Zengcheng District, with an annual production capacity of 770000 units. The new electric vehicle factory construction project based on the concept of "harmonious, green and zero carbon" is under way, and the new factory is scheduled to be put into production this year.

At present, Guangzhou Auto Honda models for sale include Accord, Haoying, Guandao, Odyssey, Zhijia, colorful Intelligence, style, Ling School and Feido models. While fuel vehicles are still the tone of Honda's overall market in China, GAC Honda's sales in China have fallen amid a shrinking traditional fuel vehicle market and rising domestic sales of new energy vehicles.

Honda's China terminal sales totaled 280738 vehicles from January to April 2024, down 10.9 per cent from a year earlier, according to official Honda China data. Of this total, Guangzhou Auto Honda was 141871, down 20.49 per cent from a year earlier. Subdivided into GAC-Honda models, retail data show that in the first four months of this year, the top three models sold by GAC-Honda were Accord, Haoying and styling respectively, with cumulative sales of 41006, 32369 and 31643 respectively, followed by Odyssey and colorful Zhi. 9749 and 8691 respectively, while the rest are less than 8000.

In terms of electric vehicles, up to now, Guangzhou Auto Honda has two pure electric vehicles, the e:NP1 extreme 1 and the e:NP2 extreme 2. Among them, the advanced version of the Guangzhou Auto Honda e:NP2 2 went on sale at the 2024 Beijing Auto Show, with a new car price of 189800 yuan and a limited time surprise price of 159800 yuan. The e:NP1 1 is the first pure electric model of Guangzhou Auto Honda, which was launched in 2022 and positioned as a small pure electric SUV. Unfortunately, the e:NP1 1 was not bought by consumers in the car market. From January to April this year, sales were 23, 33, 94 and 117 respectively, with a total of 267 vehicles, compared with only 4502 in the past 2023.

In response to the GAC Honda layoffs, the industry is generally believed to be related to the decline in sales. As one of the leading Japanese car companies, Honda's sales in China have been in a severe period of decline in the past two years. The main reason is that it is not bright enough in the new energy sector. Although compared with other Japanese joint ventures, Honda is more determined to transform the electrified sector and is more "aggressive" in its goal of electrification. But at present, neither GAC Honda nor Dongfeng Honda has pure electric models that can carry the banner of sales. In October 2023, GAC Honda announced that it would no longer launch new pure fuel models from 2027. From the time point of view, it is only about three years before GAC Honda banned the launch of new fuel vehicles. With the continuous expansion of the new energy vehicle market, Guangzhou Auto Honda, as a latecomer, will face a lot of competitive pressure even if it launches new electric vehicle products.

Of course, Honda's poor performance in China is only a microcosm of Japanese joint venture brands. The retail share of Japanese brands was only 15.2 per cent in April, down 3.6 per cent from a year earlier and the lowest since 2013, according to the federation.

Reducing costs and improving efficiency are the goals of global automakers, especially in the context of the transformation of new energy vehicles, layoffs have become an effective measure to "cut costs and improve efficiency". At present, traditional car companies, including Honda, are speeding up the electric layout. with the continuous expansion of the new energy vehicle market, traditional car companies are facing both opportunities and challenges, and "how to maintain their strength." to survive in the new round of competition is something that many car companies need to face, whether it is Japanese joint venture brands or other car companies.

Honda, which will invest 10 trillion yen in electrification by 2030, held a press conference on car electrification on May 16. For the Chinese market, Honda China has announced that it will launch 10 pure electric models by 2027 and sell 100% of all electric vehicles by 2035. In addition to the current launch of the eROR N series, specific products will continue to expand the lineup of pure electric vehicles through the release of the new pure electric vehicle "Ye" brand.

Honda's new China electric brand, Ye, was unveiled at the 2024 Beijing Motor Show. The Ye S7 and Ye P7 will be mass-produced by Dongfeng Honda and Guangzhou Auto Honda respectively.

Honda aims to make electric and fuel-cell vehicles account for 40 per cent of its global sales by 2030 and reduce the cost of manufacturing electric vehicles by more than 30 per cent, according to Honda chief executive Mimoto.

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