Dongfeng-Honda’s 2015 Plan failed and third plant construction postponed to 2017

Bad news came out in Honda’s another joint-venture branch in China the day after Guangqi-Honda’s announcement of third plant and engine plant’s put into production, which involved that Dongfeng-Honda’s plan of construction the third plant may be postponed to 2017 and the final decision would be made at the end of the year. “The plan may be postponed to 2017 and aimed to be put into production no later than July, 2018.” One senior executive of Dongfeng-Honda said during interview at the end of October. However, the news has not beenofficially confirmed by Dongfeng-Honda or Honda-China.

Analysts believe that it is the result of inner and outer powers’ coaction. In the outer circumstances, the Chinese automobile market is slowing down significantly. The domestic automobile sales increased 6.9% in 2014, only half of 2013. And the situation this year is more disappointing. Sales only increased 0.31% in Chinese market from January to September. “Apart from the outer factors, problems in Dongfeng-Honda itself are more important.” One pre-worker of Dongfeng-Honda told reporters. The construction plan of third plant was proposed in the 10-year anniversary of Dongfeng-Honda, and behind the construction plan is Dongfeng-Honda’s new 10-year mid-term career plan in the Chinese market, that is to produce and sell 1 million vehicles in 10 years. In addition, according to the plan, Dongfeng-Honda’s sales number should reach 0.5 million in 2015.

However, Dongfeng-Honda is facing a tortuous development. Its sales number in 2014 decreased from 321,400 in 2013 to 308,200. The outlet sales number only reached 275,000 in the previous three quarters. Although one popular model X-RV lifted the sales volume greatly, the possibility of accomplishing the above target is nearly zero. Besides, other models are facing declining sales, which means the failure of “3-year plan” proposed in 2013.

In sharp contrast, Guangqi-Honda faces optimistic situation. Under the same outer environment, Guangqi-Honda’s sales volume reached 420,000 from January to September, increasing 40%. The third plant and engine plant are also put into production as scheduled.

After C-RV’s walking out of shrine, Dongfeng-Honda’s accumulated problems are emerging day by day. Although it has taken efforts to adopt measures such as increasing products, the effects seem not to be obvious.