Honda's China production increased to meet 2015 projections

Targets 8-10% market share for PCs; EV/HV production to start by 2014

2013/05/02

Summary

Honda's sales and target by joint venture
 Honda is said to be lagging behind other OEMs particularly European, US, and Korean OEMs, in terms of an investment in production and marketing in China and in an introduction of vehicles designed for China. Honda announced its medium/long-term strategy for its business in China in April 2012. One year after this announcement, Honda announces its intention to firmly maintain its target of medium/long-term share of 8-10% in the passenger car market in China and of sales of more than 1.2 million passenger cars for 2015 (revealed in MarkLines' independent research conducted in April 2013).


 Honda will press ahead with the enhancement of its lineup of models marketed in China, including the introduction of more than 10 new models including EVs/HVs during the three years from 2013 to 2015, and the replacement of engines by those equipped with a next-generation "Earth Dreams Technology".


 Along with the enhancement of its line-up, concerning vehicle production, Honda will enhance its Wuhan plant in Central China and build a new passenger car plant (a new line) within the Zeng Cheng plant in the suburbs of Guangzhou in South China. Honda will boost its production capacity of vehicles in China from the current 870,000 units to 1.1 million units a year in 2014, 1.25 million units in 2015 or later, and further to 1.5 million units in 2020.


 With regard to engine production, in addition to the enhancement of its existing engine plant, Honda will start the construction of a new engine plant at the Zeng Cheng plant of Guangqi Honda Automobile in 2013. Honda is said to boost its production capacity of engines from the current 780,000 units to 980,000 units a year in 2014 and further to 1.48 million units in 2020.


Related Reports:
Honda releases medium-term strategy (2): North American exports to top 200,000 units after 2014 (Jan. 2013)

Honda releases medium-term strategy (1): The all-new Fit to be developed in six regions (Dec. 2012)

Honda: Medium-term sales strategy of its business in China

Details
Sales strategy * To firmly maintain its intention to improve the quality of current service and also to focus on the improvement of customer satisfaction. To respond to replacement demand from used car sales in order to expand customer base.
* As a strategic model, to focus on the expansion of sales especially of the New Fit series until 2015.
* To increase the number of dealers mainly in cities in inland China (Note 1) in order to expand its sales network.
Sales target * Medium/long-term target of market share: 8 to 10% in the passenger car market in China
* Sales volume: more than 750,000 units in 2013 (including imports),
                       more than 1.2 million units in 2015 (excluding imports)
  Dongfeng Honda
Automobile
(excluding imports)
* Sales volume target: 340,000 units in 2013
                                 500,000 units in 2015 (including 200,000 units of Civic series,
                                 200,000 units of Ciimo series, and 100,000 units of others)
Guangqi Honda
Automobile
(excluding imports)
* Sales volume target: 400,000 units in 2013, more than 700,000 units in 2015, and 1 million units in 2020.
Honda Automobile
(China)
(exports from China)
* Sales volume target: about 50,000 units in 2014 (all products are exported)
Acura
(imports only)
* Sales volume target: 4,000 units in 2013 (exported about 4,000 units in 2011 and about 2,300 units in 2012), about 10,000 units in 2015.
Model plan ▽To switch the current model strategy from focusing on middle-class midsize cars/SUVs to emphasizing compact cars/hybrid models.
* 2013-2015: To introduce more than 10 models including full-remodel and new models.
  This includes HVs and two compact models designed for China with a low-displacement engine, which are few in number among existing models.
* To upgrade the engines used in Honda/Acura models marketed locally in China with a new-generation engine by the end of 2015.
Guangqi Honda
Automobile
(Honda/Everus brand)
▽To enhance the introduction of new models including launch of more than two models a year.
* 2013-2015: To introduce eight models including full-remodel and new models. Yet, Guangqi Honda Automobile does not plan to introduce any electric vehicles under Everus brand.
  Among them, Guangqi Honda Automobile will start producing/selling the 9th-generation Accord, a production model (middle-class) based on the Concept C, and Everus SUV in 2013. Guangqi Honda Automobile will prepare a production structure for EV (Fit EV) around July.
Dongfeng Honda
Automobile
(Honda/Ciimo brand)
▽Dongfeng Honda Automobile will make the two platforms, CR-V and Civic, into strategic platforms in China, planning to focus on the enhancement of the lineup including addition of derivative models of the CR-V and the Civic.
* To build a lineup of eight models by 2015 including three popular models, of which 100,000 units will be sold per year. To improve the structure of vehicle bodies by fully utilizing technology for weight reduction.
 2013: To focus mainly on the improvement of marketing/service/sales network based on existing models. Dongfeng Honda Automobile will start production and marketing of Honda's global strategic model based on the Concept S earlier than other regions worldwide (There is also a plan to add a hybrid version in the future).
 2014: production of HVs will begin.
Acura brand
(import/sales)
▽To enhance a lineup of models marketed locally (Acura announced that it had no plan to produce locally as of February 2013).
In 2013 and later, Acura will gradually introduce models with low-displacement engine, which are in great demand in China.
* 2012: Launched ILX (compact hybrid sedan)/RDX (midsize SUV).
* 2013: To launch a flagship mode, the RLX.
* 2014 and later: To launch the New NSX, which is equipped with a high-performance/high-output hybrid system, "Sport Hybrid SH-AWD" (Note 2).
Sources: Honda's announcement on April 10/November 22, 2012, MarkLines' independent research, and various media reports.
Note 1. In March 2013, Honda has about 860 4S dealers/exclusive dealers in China. Among them, 470 are Guangqi Honda Automobile-affiliated dealers, 354 Dongfeng Honda Automobile-affiliated dealers (332 at the end of June 2012), and 35 Acura-exclusive dealers. Honda planned to increase the number of Acura-exclusive dealers to 50 by the end of 2012, but the number declined by 6 in 2012.The 4S dealer represents a dealer that has the following four functions - Sales (sales of vehicles)/Service (after-sales service)/Spare parts (supply of parts)/Survey (information feedback).
Note 2. SH-AWD is an abbreviation of "Super Handling All Wheel Drive".