Honda (NYSE:HMC) layoffs are coming to China as the automotive company using a voluntary program to reduce its headcount overseas.
These Honda layoffs are happening at GAC Honda Automobile. This is a joint venture between the automotive company and the state-owned business GAC Group. The current voluntary layoffs include 1,400 employees or 14% of the joint venture’s total workers.
The reasons for these layoffs are increasing competition and declining sales in China. That has Honda expecting 2024 vehicle sales of 1.06 million. This would be a 13% decrease from its 2023 sales.
All of this comes as China’s own automobile companies are gaining popularity in the country. This is leaving many Japanese brands struggling to compete in this field. That saw Mitsubishi Motors end car production in China last year while others are pulling back on production in the country.
What Comes After the Honda Layoffs?
While competition in the Chinese market is fierce, Honda doesn’t plan to leave it just yet. Instead, the company is going to switch focus to producing more EVs in the country. That makes sense as these have grown in popularity in China over the last few years.
However, this does require the layoffs announced by Honda. The company needs to cut operating costs to better facilitate its continuing operations in China.
HMC stock is up close to 1% as of Wednesday morning.
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On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
