Honda's China production increased to meet 2015 projections
Targets 8-10% market share for PCs; EV/HV production to start by 2014
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.
Honda releases medium-term strategy (2): North American exports to top 200,000 units after 2014 (Jan. 2013)
Honda: Medium-term sales strategy of its business in China
|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)
|* 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)
|* Sales volume target: 400,000 units in 2013, more than 700,000 units in 2015, and 1 million units in 2020.|
(exports from China)
|* Sales volume target: about 50,000 units in 2014 (all products are exported)|
|* 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.|
|▽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 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.
|▽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".|
Enhancement of passenger car production: Honda to start building a Zeng Cheng new plant in 2013, boosting its production capacity to 1.25 million units in 2015 or later
In order to achieve its medium/long-term target of sales of over 1.2 million units (including exports, but not imports) in 2015 and a medium/long-term target of 8 to 10% share of the passenger car market in China, Honda will gradually boost its production capacity in China from the current 870,000 units a year, to 1.13 million units in 2014, and further to 1.25 million units in 2015 or later, which Honda plans to increase to 1.5 million units in 2020.
Specifically, Honda will expand Dongfeng Honda Automobile's second plant in Wuhan, Hubei Province in Central China to boost the production capacity (by Dongfeng Honda Automobile) of passenger cars in Wuhan from the current 340,000 units a year to 360,000 units by the end of 2013, and further to 480,000 units in 2014.
In addition to this, Honda will build a new plant (a third production line in Guangzhou) within Guangqi Honda Automobile's Zeng Cheng plant in the suburbs of Guangzhou in Guangzhou Province in South China, in order to boost the production capacity of passenger cars in Guangzhou, including 50,000 units by Honda Automobile (China), a plant in Guangzhou exclusively for export, from the current 530,000 units to 650,000 units in 2014 or later, and further to 770,000 units in 2015 or later. In addition, Honda plans to boost the capacity to more than 1.05 million units in 2020.
Concerning a plan to boost the production capacity of Honda Automobile (China) (a plant exclusively for export), in April 2013, Honda has only announced that Honda Automobile (China) would maintain its production capacity at 50,000 units a year until 2014.
Honda: Production structure of passenger cars in China
|OEM (location)||Plant||Model||Result of production||Production Capacity|
|2011||2012||Jan.- Feb. 2012||Jan.- Feb. 2013||As the end of Apr. 2013||Plan (by May 2013)|
|Dongfeng Honda Automobile (Central China)||Wuhan first plant||CR-V 2.0/2.4, Civic 3box, Spirio, Elysion, Ciimo sedan||253.9||285.4||43.9||39.5||240||240|
|Wuhan second (new) plant||100||120 (by 2013) → 240 (in 2014)|
|Total||253.9||285.4||43.9||39.5||340||360 (by 2013) → 480 (in 2014)|
|Guangqi Honda Automobile (South China)||Huangpu plant (Honda Automobile (China)) (Guangzhou first line)||Accord 2.0/2.4/3.5, Odyssey 2.4, Fit 2box 1.3/1.5, City Fengfan 1.5/1.8, Crosstour 2.4/3.5, Everus S1 1.3/1.5||369.2||308.6||54.9||41.9||240||240|
|Zeng Cheng plant (Guangzhou second line)||240||240|
|Zeng Cheng plant (Guangzhou third line)||-||(Scheduled to start construction by June 2013)||-||120 (After 2014) → 240 (the second phase construction)|
|Total||369.2||308.6||54.9||41.9||480||600 (After 2014) →720 (After 2015) →1,000 (in 2020)|
|Honda Automobile (China) (South China)||A plant in Guangzhou exclusively for export||Jazz, Fit 1.2/1.4/1.5 (For Europe or Canada, and so on)||24.2||28.7||4.3||3.8||50||50 (by 2014)|
|Total||24.2||28.7||4.3||3.8||50||50 (by 2014)|
|Grand total||647.3||622.7||103.1||85.2||870||890 (by 2013) →1,130 (in 2014) →1,250 (After 2015) →Over 1,530(in 2020)|
Note: Honda Automobile (China) Co., Ltd., which is Honda's plant in Guangzhou exclusively for export, started production and export of the Fit for Canada in January 2012.
Guangqi Honda Automobile: to build production capacity of 1 million units in Guangzhou by 2020
▽To expand the Zeng Cheng plant in Guangzhou, adding production capacity by 240,000 units per year in 2015 or later
|Guangqi Honda Automobile will build its third new production line (in Guangzhou) within the Zeng Cheng plant in the suburbs of Guangzhou, adding production capacity by 240,000 units a year in 2015 or later through a second-stage construction. (The total investment is worth 3.56 billion RMB when combined with a new engine plant on the same property, construction of which is scheduled to begin in 2013.) The first-stage construction of the new line (one line) was forced to be postponed from the originally planned the end of 2012 to June 2013 due partly to negative impacts of anti-Japan demonstrations in the second half of 2012 (revealed by MarkLines' independent research). In addition, the completion of the first-stage construction may be delayed from the originally scheduled 2014.|
|When the first-stage construction of the new (third) line of the Zeng Cheng plant is completed in 2014 or later, its production capacity will be newly increased by 120,000 units a year. Then, through a second-stage construction, the production capacity will be further boosted by 120,000 units. With these moves, when the 240,000 units of the new production lines is combined with the existing two lines (240,000 units each by the first line of the Huangpu plant and the second line of the Zeng Cheng plant), Guangqi Honda Automobile will boost its production capacity in Guangzhou to 600,000 units a year in 2014 or later and further to 720,000 units in 2015 or later.|
|In addition, Guangqi Honda Automobile announced a plan to increase its production capacity of passenger cars to 1 million units a year in Guangzhou in 2020 at the engine supplier annual meeting of Dongfeng Honda Engine/ Guangqi Honda Automobile/Honda Automobile (China) held in December 2012.|
Dongfeng Honda Automobile: to build production capacity of 480,000 units a year in Wuhan by 2014
▽The second plant started operations in July 2012. Dongfeng Honda Automobile to boost the annual production capacity in Wuhan to 480,000 units in 2014
|In July 2012, Dongfeng Honda Automobile completed the first-stage construction of the second (new) passenger car plant in Wuhan to started operations. Dongfeng Honda will begin a second-stage construction in 2013 with a plan to complete its in 2014. (The initial investment in the construction of the second plant is worth about 1.15 billion RMB.)|
|Dongfeng Honda Automobile will boost the production capacity of its second plant from 100,000 units a year in October 2012 to 120,000 units in 2013, and further to 240,000 units in 2014 through a second-stage construction. With this, combined with the production capacity of the existing first plant, the production capacity of the entire plant in Wuhan will amount to 480,000 units per year in 2014. (In July 2012, Dongfeng Honda employed about 6,900 workers at the two plants.)|
|Dongfeng Honda Automobile's second plant (land area: 1.05 million square meters) is located about 4km northeast of the first plant in Wuhan. The second plant has stamping/welding/painting/plastic molding/assembly/measurement line and an engine assembly line. The second plant will produce all of the Spirio/Civic/New CR-V. In the second plant, the painting line reduces CO2 emissions by featuring a short process and a waste heat recycle system. The plastic molding line utilizes a water-based primer to reduce volatile organic compound (VOC) emissions. In addition, the assembly line introduces an ecological, efficient and worker-friendly system, featuring the world's first door-storage full pallet that flexibly controls delivery height, a solar power generator with a maximum power of 600kW, and a barrier-free process that minimizes the walk counts of workers.|
Powertrain production: Honda to boost production capacity from the current 780,000 units a year to 940,000 units in 2014
In April 2012, Honda announced its medium/long-term strategy in China until 2020, in which it will strengthen its business base for the future generations in China including enhancement of procurement of parts in China, utilization in its global business, and enhancement of functions for quality/service.
In this strategy, concerning the powertrain, Honda is currently pressing ahead with the enhancement of production in line with the expansion of production capacity of passenger cars. Honda will expand its Wuhan engine plant and will begin the construction of a new engine plant of Guangqi Honda Automobile in 2013, thus boosting its production capacity of engines in China from the current over 780,000 units a year to 840,000 units at the end of 2013, 940,000 units in 2014 or later, and further to 1.06 million units in 2015 or later, which Honda has announced a plan to increase to over 1.48 million units in 2020.
Honda: Production structure of engine plants in China
|Engine plant (Area)||Location of main plant||Production result||Annual production capacity|
|2011||2012||Jan.- Feb. 2012||Jan.- Feb. 2013||As the end of Apr. 2013||After expansion (plan year)|
|Dongfeng Honda Engine (South China)||Guangzhou city||366.0||306.7||42.2||55.1||480||n.a. *Note|
|Guangqi Honda Automobile (South China)||(To start construction by June 2013)||-||100 (2014 or later) → 200 (future)|
|Dongfeng Honda Automobile (South China)||Wuhan city||253.9||285.4||39.5||43.9||Over 300||360 (2013) →480 (2015 or later)|
|Total (except for Honda Automobile (China))||619.9||592.1||81.7||99.0||Over 780||840 (-2013)→ over 940 (2014-)→ over 1,060 (2015-) →over 1,480 (2020)|
Enhancement of an engine production structure
▽Guangqi Honda Automobile to build its own engine plant in Zeng Cheng in the suburbs of Guangzhou in 2013 or later
|Guangqi Honda Automobile is planning to build an engine plant that is on the same site of the Zeng Cheng new passenger car plant (a third passenger car production line in Guangzhou) in the suburbs of Guangzhou, which it plans to start building in June 2013 (revealed by MarkLines' independent research conducted in April 2013). The construction of the new engine plant will begin at the same time as the construction of the Zeng Cheng new passenger car plant. The first-stage construction will be completed as early as 2014 and operations will start (The combined total investment with the construction of the third production line in Guangzhou is worth 3.56 billion RMB).|
|Guangqi Honda Automobile will build a production capacity of 100,000 units per year at the Zeng Cheng new engine plant in 2014, which it plans to increase to 200,000 units through a second-stage construction.|
|Dongfeng Honda Engine, which is within Guangqi Honda Automobile (in Guangzhou), has been supplying engines to Guangqi Honda Automobile and others. In April 2013, Dongfeng Honda Engine has a production capacity of 480,000 engines per year. In addition, it has a production capacity of 480,000 sets of engine components including cylinder blocks/heads, and connecting rods per year.|
▽Dongfeng Honda Automobile to expand an annexed engine plant, boosting production capacity to 360,000 units a year in 2013
|Dongfeng Honda Automobile is currently expanding its own engine plant in Wuhan in line with the expansion of the production capacity of vehicles. Dongfeng Honda Automobile has already boosted the production capacity of the engine plant to over 300,000 units a year in April 2013, which will be increased to 360,000 units in 2013. Dongfeng Honda Automobile also plans to boost the capacity further to 480,000 units in 2015 or later.|
Enhancement of transmission production
▽Honda to expand its powertrain component plant in Foshan, Guangdong province to boost its production capacity to 600,000 transmissions a year
|Honda will expand its powertrain component plant (Honda Auto parts Manufacturing) that produces transmissions and engine components in Foshan, Guangdong province. In February 2013, a Chinese-government-affiliated agency made a public notice of the environment assessment of the expansion work of the plant.|
|This expansion work includes the enhancement of a Continuously Variable Transmission (CVT) plant and a casting plant/pulley plant. When the expansion work is completed, the plant will increase its production capacity from the current 484,000 units to 600,000 units a year. (The land area for the expansion work is about 49,164 square meters. The total investment is worth 970 million RMB. A new employment of about 1,350 positions will be created.)|
|In February 2013, the Foshan component plant has a factory (land area: about 4,073 square meters/building area: over 7,912 square meters) for crank shafts/connecting rods, a transmission factory (land area: about 52,929 square meters/building area: 52,929 square meters), and a casting plant (about 3,984 square meters/about 3,984 square meters).|
Energy saving/electric vehicle business to upgrade engines to a next-generation engine by 2015, beginning local production of EVs/HVs
Honda will upgrade the engines of all models that it markets in China under Honda/Acura brand to next-generation engines that feature a next-generation innovative technology, "Earth Dreams Technology" by the end of 2015. With this move, Honda aims at becoming a top OEM in terms of fuel efficiency in all the categories where Honda has entered in China.
In addition, in the electric vehicle business where Honda is currently lagging behind Toyota and other OEMs, Honda has started building a production structure in the electric vehicle business for core components for electric vehicles including driving secondary batteries and motors, and for EVs/HVs at its joint venture plants including Guangqi Honda Automobile. Production of the Fit EV compact hatchback will begin as early as in 2013 and local production of a compact HV model will start in 2014. Honda plans to additionally introduce midsize/large HV and PHV in the future.
|New technology strategy||▽To speed up introduction of new powertrain technology * To upgrade engines to a new-generation engine with a next-generation innovative technology, "Earth Dreams Technology" * To promote broad use of hybrid technology in China. To promote local production of HVs/PHVs|
|▽To promote weight-saving technology strategy * Dongfeng Honda Automobile makes full use of its weight-saving technology to improve the body structure of vehicles|
|Energy-saving/ electric vehicle strategy||▽To aim to become a top OEM in terms of fuel efficiency in all the categories where Honda has entered in China|
|▽To further-accelerate the localization than other OEMs including Toyota, which is currently going ahead in the electric vehicle business|
|Energy-saving vehicle-related||▽To upgrade engines in all new models marketed under Honda/Acura brand in China to a new-generation engine in 2013-2015|
|New-energy vehicle-related||HV/PHV||▽Step 1. To promote broad use of HV (compact) that uses Honda's original hybrid system, IMA (Integrated Motor Assist) * To start import/marketing of four HV models in 2012: the following models were already launched - Acura ILX through Honda's local exclusive sales network of the Acura, Honda CR-Z and Fit Hybrid by Guangqi Honda Automobile, and the Insight by Dongfeng Honda Automobile * To build a production structure in order to shift import/sales of Honda's HVs to local production: Local production of hybrid vehicles will begin in 2014. As part of this move, to procure core components of HVs in China including driving secondary batteries and motors. Considering exporting components of HVs/EVs in the future.|
|▽Step 2. Also to introduce midsize/large HV and PHV in China in the future.|
|EV||* Implemented a test-run of an EV in Guangzhou in 2011, which Honda plans to introduce in China * To prepare a structure that allows Guangqi Honda Automobile to begin production of the Fit EV in July 2013|
Sources: Honda's announcement on April 10, 2012/November 22, MarkLines' independent research, and various media reports Note: Under the 2013-2020 medium-term development plan, Guangqi Honda Automobile announces its management policy in which it would localize R&D/purchasing of parts, and promote the independence of its human resources.
Core components of electric vehicles
▽Status of building a local production structure for core components of electric vehicles including driving secondary batteries/motors
|In order to promote broad use of electric vehicles including HVs/PHVs/EVs in China, Honda is currently preparing a production structure for electric vehicles such as HVs and EVs at its local joint venture plant in China and is also promoting local production and local purchasing of core components including driving secondary batteries/motors. Honda said that it would start local production of core components as early as in 2012, but progress is unknown.|
|Honda says that it will produce driving motors for which it has original technology at its joint venture companies in Guangzhou/Wuhan and that it will produce driving secondary batteries for which it does not have its own technology in Guangzhou through a partnership with other suppliers.|
▽Honda conducted a test-run of EVs in Guangzhou in November 2011
|In November 2011, Honda implemented a test-run of an EV passenger car (Fit EV) based on the Fit in Guangzhou, Guangdong province jointly with Guangzhou Automobile and the local (Guangzhou) government. Honda verifies the usefulness and convenience of EVs mainly in urban traffic environment and also finds technical challenges for the widespread use in the future. Honda assesses the cruising range and others to offer recommendations for the preparation of infrastructure such as charging stations.|
▽Guangqi Honda Automobile: to postpone the production plan of the Fit EV until July 2013 or later
|Honda planned to begin small-lot production of the Fit EV at Guangqi Honda Automobile at the end of 2012 and mainly to start leasing centered on urban areas including Guangzhou/Shenzhen in Guangdong province and Hangzhou in Zhejiang province, where a test-run of new-energy vehicles were implemented, but postponed it as it responded to uncertain changes of the EV market in China including the government's measures and delay of the preparation of infrastructure. In April 2013, Honda said that it would prepare a production structure for the Fit EV at Guangqi Honda Automobile by July 2013 and that it would expand marketing beginning with leasing the model to midsize/large corporations and the government agencies as it pays a close attention to the market.|
|The Fit EV features electrification technology including gearbox/coaxial motor (maximum output: 92kW/maximum torque: 256Nm), which is used in Honda's fuel cell vehicle, the FCX Clarity, and a high-performance Li-ion battery. It takes less than six hours to full charge the battery on a household outlet (voltage: 220V) in China. The maximum speed is 144km. The cruising range is over 150 km in NEDC mode.|
▽Honda additionally introduced three new HVs that it imports and sells in 2012, accelerating preparation of a local production structure of HVs to start production in 2014
|Honda has so far announced that it would start production of HVs in China in 2014. Although details have not been announced, Honda is accelerating the preparation of a structure in order to start production because it is lagging behind its major competitors including Toyota.|
|Before this, in November 2007, Honda started importing/selling the Civic Hybrid (standard price: 269,800 RMB) through Dongfeng Honda Automobile, and also added models imported and sold including the CR-Z (288,800 RMB) in July 2012 through Guangqi Honda Automobile, the Insight (209,800 RMB) in November 2012 through Dongfeng Honda, and the Fit Hybrid (179,800 RMB) through Guangqi Honda Automobile, thus enhancing its lineup of HVs in China.|
(Reference) Honda: Passenger car models at each plant in China and their sales volume and plan
(Unit, factory shipment basis)
|Manufactory (OEM)||Model||Sales volume (passenger car)||Sales target|
|2009||2010||2011||2012||Jan.-Feb. 2012||Jan.-Feb. 2013||2013||2014-|
|Dongfeng Honda Automobile||CR-V||105,233||140,000||160,003||169,036||15,534||23,903|
|Total||210,601||260,600||255,468||282,171||41,184||37,761||340,000 *Note||500,000 (in 2015)|
|Guangqi Honda Automobile||Accord||175,361||171,728||160,735||104,114||17,132||12,847|
|Total||365,623||386,031||362,294||316,405||41,482||41,511||400,000 *Note||Over 700,000 (in 2015)|
|Honda Automobile (China)||Jazz(European version)/ Fit(North American Version)||28,299||25,009||24,249||29,034||4,216||3,207|
|Total||28,299||25,009||24,249||29,034||4,216||3,207||n.a.||50,000 (in 2014)|
|Grand total||604,523||671,640||642,011||627,610||86,882||82,479||750,000||Over 1,250,000 (in 2015)|
Note: Figures do not include imports. As of April 2013, Guangqi Honda Automobile and Dongfeng Honda Automobile are Honda's sole import selling agency in China, marketing CR-Z/Fit Hybrid and Civic Hybrid/Insight, respectively.
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