Honda delays 5.2 billion yuan China plant, citing slowdown
Honda Motor Co. will delay the construction of a planned $822 million (5.2 billion yuan) assembly plant in China in the wake of stagnant demand.
The carmaker previously had planned to start construction on a third plant with partner Dongfeng Motor Corp. in Wuhan, said Chen Binbo, vice president of the two automakers' joint venture.
The partnership may start building the plant in 2017 and begin production no later than the summer of 2018, with a final decision to be made at the end of this year, he said.
The project's postponement is noteworthy because Honda has boosted sales by 34 percent in the first nine months of the year.
By contrast, industry deliveries of light vehicles rose only 2.8 percent in the period, the market's slowest rate of growth in three years. Industry sales have been dampened by down by slower economic growth, stock-market volatility and caps on registrations in some big cities.
"Many carmakers are looking at a staged expansion," said Tao Gao, an analyst for IHS Automotive. "Honda is not alone. We think it's likely that many carmakers will shelve their second- or third-phase expansion plans in the next few years because the market doesn't grow as fast as they expected."
Honda's plans had called for a plant with annual capacity of 240,000 units with an investment of 5.2 billion yuan. The facility was to build SUVs, sedans and electric vehicles, according to a December 2014 filing by the Hubei provincial development and reform committee that approved the project.
The Nikkan Kogyo newspaper reported Thursday that Honda and Dongfeng had shelved plans to build a plant in China.
The partnership may start building the plant in 2017 and begin production no later than the summer of 2018, with a final decision to be made at the end of this year, he said.
The project's postponement is noteworthy because Honda has boosted sales by 34 percent in the first nine months of the year.
By contrast, industry deliveries of light vehicles rose only 2.8 percent in the period, the market's slowest rate of growth in three years. Industry sales have been dampened by down by slower economic growth, stock-market volatility and caps on registrations in some big cities.
"Many carmakers are looking at a staged expansion," said Tao Gao, an analyst for IHS Automotive. "Honda is not alone. We think it's likely that many carmakers will shelve their second- or third-phase expansion plans in the next few years because the market doesn't grow as fast as they expected."
Honda's plans had called for a plant with annual capacity of 240,000 units with an investment of 5.2 billion yuan. The facility was to build SUVs, sedans and electric vehicles, according to a December 2014 filing by the Hubei provincial development and reform committee that approved the project.
The Nikkan Kogyo newspaper reported Thursday that Honda and Dongfeng had shelved plans to build a plant in China.
