After GAC Toyota, the cold wind of layoffs has blown to GAC Honda. On December 2nd, Honda announced that the company will lay off about 900 contract workers at its joint venture GAC Honda in China. This is the first time Honda has implemented layoffs in the 25 years since its joint venture with GAC in 1998. In July of this year, another Japanese car company, Toyota, announced that it would lay off about 1000 people at its joint venture GAC Toyota. At that time, GAC Toyota stated in a declaration that, due to recent production levels, the company had terminated the contracts of about 1000 temporary workers, but it would not affect the formal employees of the company. The company will provide economic compensation in accordance with the law and explain the situation to those affected.
Guangqi Honda responded that this time, it has terminated the personnel dispatch agreement with the labor service company. The objects involved in this termination are only labor dispatch personnel, not regular employees. The labor dispatch system is an employment system that Guangqi Honda can flexibly adjust according to production needs. Guangqi Honda will provide economic compensation in accordance with the law and regulations, and actively assist relevant personnel in reemployment. Honda pointed out that this round of layoffs is equivalent to 7% of the approximately 13,000 employees of the joint venture, and that production is decreasing, so the dispatch contract is also terminated.
However, Honda did not disclose which models’ production is being reduced. Almost on the same day that Guangqi Honda’s layoffs were exposed, Toyota announced the suspension of production on some aging production lines at FAW Toyota. A Toyota spokesperson stated that the partial production suspension at the Tianjin factory of FAW Toyota is a planned measure and that the reason for stopping the production line is to optimize production in consideration of aging and changes in the model composition. In fact, in the face of the rise of Chinese car brands, the hot sales of new energy vehicles, and the intense price war in the Chinese market, Honda, Toyota, and even the entire Japanese car brands’ market share in China continues to decline, and the pressure in China is increasing.
According to data from the China Association of Automobile Manufacturers, the market share of Japanese passenger cars in the first 10 months of this year was 14.5%, a decrease of 4.2 percentage points compared to 18.7% in the same period in 2022. In order to salvage their market share in China, Japanese car companies, including Honda and Toyota, have formulated their own transformation plans. Honda announced that GAC Honda will no longer introduce new pure gasoline models to the market starting in 2027, and will achieve 100% electrification in China by 2035. Toyota had previously announced that it will invest 5 trillion yen in pure electric vehicle-related areas before 2030, an increase of 1 trillion yen from the previous plan.
However, Japanese car companies, who have been struggling in the Chinese market, are still winners in the global market. According to Toyota’s latest global sales report, overall sales in October this year increased by 7.0% to 890,000 units, reaching a historic high for October. At the same time, Toyota achieved a new high in profits in the third quarter of 2023, remaining the most profitable car company in the world. On the other hand, Toyota is increasing its investment in the Indian market. It is reported that Toyota will invest nearly $400 million to build its third factory in India, the first time in over a decade that Toyota has expanded its production capacity in India. Toyota, Honda, and Nissan all raised their fiscal year performance expectations in the third quarter financial report.