Honda Motor (HMC) Stock — China Plant Closures Cut Petrol Capacity in Half

TLDR

• Honda plans to shut one joint venture plant with GAC Group in China in June 2026
• A second plant with Dongfeng Motor could also close in 2027
• The closures would halve Honda’s petrol car capacity in China to ~480,000 units per year
• The restructuring is part of a broader overhaul that could cost up to $15.7 billion
• Honda’s China sales have fallen sharply as domestic EV makers like BYD take market share

Honda is preparing to significantly cut its petrol car production in China. The company plans to halt operations at one of its joint venture plants with Guangzhou Automobile Group (GAC) in June 2026, Reuters reported on Friday, citing people familiar with the matter.

Honda Motor Co., Ltd., HMC

A second plant, run through a joint venture with Dongfeng Motor, could also be suspended in 2027. The moves are a direct response to sliding sales of fuel-powered vehicles in the Chinese market.

Closing one plant at each joint venture would cut Honda’s petrol car capacity in China from around 960,000 units per year to roughly 480,000. Total capacity would drop to approximately 720,000 vehicles annually.

The scale of the pullback reflects how quickly conditions have changed for foreign automakers in China. Just a few years ago, Honda was one of the most popular foreign car brands in the country.

BYD and Local Rivals Eat Into Honda’s Market Share

The core problem is competition. Chinese domestic EV makers, led by BYD, have moved fast and captured large chunks of the market that foreign brands used to dominate.

BYD’s rise in particular has squeezed Honda hard. Consumers have shifted toward electric vehicles at a pace that caught many legacy automakers off guard, and Honda is now responding with a wide-ranging restructuring.

The broader overhaul Honda is undertaking could cost up to $15.7 billion, according to Reuters. That figure reflects just how deep the company needs to dig to reposition itself around electric vehicles.

Honda has not released specific financial targets tied to the China plant closures, but the cuts are framed as a way to bring production in line with actual demand.

HMC Stock Trading Below Historical Averages

On the stock side, HMC is currently trading at around $24.36, which GuruFocus values as roughly 34% below its calculated fair value of $36.90.

The company’s P/E ratio sits at 9.7x on a trailing twelve-month basis, slightly above its five-year median of 8.27x.

Its GF Score stands at 74 out of 100. Profitability and growth are both rated 7 out of 10, while momentum comes in at just 2 out of 10, reflecting weak recent price performance.

No insider buying or selling has been reported in the past three months.

Honda reported consolidated sales of JPY 21.7 trillion for fiscal 2025. Automobiles account for 65% of revenue, with motorcycles contributing 17%.

The company’s market cap sits at approximately $31.6 billion.

The GAC joint venture plant closure in June will be the first concrete step in what looks like a multi-year restructuring of Honda’s China operations.

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