Honda in China: Vezel & XR-V small SUVs contribute to strong sales

 German and U.S. OEMs' car sales have stalled in China as growth in the local automotive market slows. However, Japanese OEMs are enjoying strong sales. Honda Motor Co., Ltd.'s cumulative retail car sales in China for January-November 2015 increased by 33.0% year-on-year (y/y) to 869,000 units, marking a substantial increase. The popularity of the new Vezel and XR-V subcompact SUV models made a significant contribution, with sales for these two models together exceeding 200,000 units in the period January-November 2015.

 In 2016, Honda will launch a new Civic, as well as a new compact hatchback, and begin local manufacture of the Acura luxury compact sport utility vehicle (SUV) and Accord hybrid vehicle (HV). It appears the company has a goal in 2016 for sales of over 1 million units in China. 

 In preparation for future growth in sales, Guangqi Honda Automobile Co., Ltd., a joint venture (JV) between Guangzhou Automobile Group and Honda, began operations at its third plant (annual production capacity of 120,000 units) in September 2015. Currently the Fit subcompact car is being produced there, and manufacture of models like the Vezel will begin in the future. Because of this, Honda's annual production capacity in China has increased to 1.13 million units.

 At the same time, Dongfeng Honda Automobile Co., Ltd., a JV between Dongfeng Motor Corporation and Honda, has decided to delay construction on a third plant in Wuhan for the present. Dongfeng Honda's production volume for January-November 2015 increased by 12.3% y/y to 344,000 units. However, this volume is well within the JV's annual production capacity of 480,000 units. Dongfeng Honda is expected to start considering construction of a new plant after it improves capacity utilization at its existing plant. The JV is very likely to resume the project in 2017 and begin operations at the new plant in July 2018.