With the release of July sales figures, more and more industry insiders are beginning to worry about Honda’s performance in China.
According to Honda China, Honda’s terminal sales in China in July were 52567, down 41.
4% from a year earlier.
in the first seven months of this year, Honda’s cumulative sales in China were 468473, down 24.
4% from a year earlier.
Compared with the decline in sales, what is more worrying is that the terminal transaction prices of Honda’s models have also been lost, and many star models have failed to win the favor of consumers with a discount of 30,000 to 50,000 yuan.
On the contrary, new energy has shown a momentum of rapid development.
According to data released by the China Automobile Circulation Association, retail sales of 840000 conventional fuel vehicles and 878000 new energy vehicles were sold in July.
The monthly retail sales of new energy passenger vehicles exceeded that of fuel passenger vehicles for the first time, with a penetration rate of 51.1%. Between one advance and one retreat, the joint venture brands dominated by traditional fuel vehicles are in an awkward position, and Honda is naturally not immune, coupled with the previous Honda capacity adjustment in China and the news of Guangzhou Auto Honda layoffs.
Honda has formed a public opinion image of successive defeats in the Chinese market.
Tuyuan: Galaxy, and under the drag of the Chinese market, Honda’s overall global performance has also begun to decline.
According to Honda’s official global production information, Honda’s total global production in the first half of this year was 1884958, down 6.
6% from the same period last year.
Among them, production in China was 415797, down 32.
7% from the same period last year, while the US market rose 2.
1% to 521604.
In the first half of this year, China accounted for 22.
1 per cent of Honda’s global production, while the US accounted for 27.
7 per cent, and the two markets, which could have been neck and neck, began to be out of balance.
Judging from the data released by Honda alone, China was the hardest hit to the decline in Honda’s performance, while the Japanese and American markets stabilized, which largely slowed Honda’s decline.
What worries Honda even more than the decline in sales is that the previously strong “engine” business is gradually being replaced by the new energy industry, and Honda has not yet established an advantage in emerging technologies.
Honda people, who used to cultivate the “engine” industry, are becoming more and more confused.
Passive Honda, the full name of Honda is “Honda Technology Research Industry Co., Ltd.”. Since Honda founder Songichiro Honda, this “craftsman” image of the car company has formed the brand attribute of “technology first”.
Honda Songichiro once said: “inventing is like falling in love.
In the eyes of outsiders, they often can’t sleep at night, eat unwillingly, and feel that this is suffering.
” But in my opinion, there is nothing more interesting than this.
” Honda’s characteristics of advocating technology and loving invention are mainly reflected in the field of engines.
There is a mantra in Japanese society, “Toyota’s interior, Nissan’s chassis, Honda’s engine.
” In the Chinese market, Honda has also been known as the “buy engine to send cars” brand, Honda red-headed engine is the belief of many Honda fans.
Honda China, in fact, most of Honda’s business is an extension of the engine industry, including motorcycles, cars, yachts and Honda Jet aircraft, among which the automobile business is the most influential, so many people think of Honda as a car company.
According to Honda’s results for fiscal year 2023 (2023.
4-2024.
3), Honda achieved revenue of 20.
43 trillion yen (948.
2 billion yuan) in fiscal 2023, an increase of 20.
9 percent over the same period last year.
Operating profit soared 77 percent to 1.
38 trillion yen (64 billion yuan), a record high, with an operating profit margin of 6.
8 percent.
Net profit rose 70 per cent from the previous fiscal year to 1.
11 trillion yen (51.
5 billion yuan).
Of this total, Honda’s revenue was 13.
79 trillion yen (640 billion yuan), up 27.
9 percent from a year earlier, and operating profit was 560.
6 billion yen (26.
01 billion yuan), down 1 percent from a year earlier.
Overall revenue rose and the auto business declined, causing the share of the auto business to fall to 67.
5%, which remains Honda’s largest business.
The rise of Honda’s business is largely due to excellent engines, and more interestingly, Minhong, who has been Honda’s president since 2021, has also been engaged in engine research and development.
Mitsuhiro graduated from the Mechanical Department of the Engineering Department of Hiroshima University and majored in engines.
After graduating with a master’s degree in 1978, he joined Honda and has been engaged in engine research and development.
I thought Honda could sweep the global market with the waste heat of the engine, but the drastic changes in the Chinese market forced Honda to quickly turn to the new energy market.
In a recent interview with Japanese television station NHK, Minhong Mibu said: “I have been working at Honda for decades after graduating from university.
I have been engaged in engine research and development and have a persistent love for engines.
To tell you the truth, I am reluctant to bid farewell to the engine era.
However, the engine has gone through more than 100 years of development, and it is impossible to rely on it forever.
Facing the future, we must look for new power sources and seek self-revolution.
So I have to tell all the staff very clearly and also to our suppliers that Honda wants to revolutionize and make great strides in the field of new energy vehicles in the future.
” Gradually abandon the previously advantageous fuel cars and quickly turn to the new energy market that is not familiar with, whether three Minhong or Honda employees will inevitably have some resistance, but Honda has no choice.
Honda needs to establish a new value system to guide employees into the new energy field.
In the ever-changing Chinese market, China is the biggest variable that Honda has to face relative to the stable sales pattern in the United States and Japan.
Because the speed of change in the Chinese market is too fast, far beyond the predictions of industry insiders, thus forming a situation in which the share of independent brands is increasing rapidly and joint venture brands are becoming more and more passive.
Looking back at the development of China’s new energy industry, it is not too much to describe the rapid development.
According to the data, from 2005 to 2015, it took 10 years for China’s new energy vehicles to break through 1%.
from 2016 to 2019, the penetration rate of new energy vehicles increased to 5%.
Although the development speed has increased, fuel vehicles are still the mainstream.
Honda China, in order to further increase the share of new energy vehicles, China issued the Development Plan of New Energy vehicle Industry (2021-2035) in 2020 (hereinafter referred to as “New Energy Plan”), which is planned to reach 2025.
Car sales reach about 20% of the total car sales.
by 2035, the core technology of China’s new energy vehicles will reach the international advanced level, and pure electric vehicles will become the mainstream of new sales vehicles, accounting for more than 50%.
Almost all joint venture brands are laying out their products according to the rhythm of “new energy planning”, and Honda is no exception.
Against the backdrop of a number of i-MMD hybrid models, Honda launched the concept VE-1 and Siming X-NV pure electric vehicles in 2019 with the help of the joint venture brands of Guangben and Dongben, achieving a comprehensive layout of fuel, general hybrid and pure electricity.
Although the general hybrid models of Toyota and Honda have gone through several iterations and have been recognized by most markets around the world, they cannot be included in the ranks of new energy vehicles in the Chinese market because they cannot be recharged.
and then can’t get financial subsidies for new energy.
The high terminal price of i-MMD hybrid models and the inability of concept VE-1 and Siming X-NV pure electric vehicles to compete head-on with their own brands make Honda passive in the new energy market.
In early 2021, BYD launched the highly lethal DM-i super hybrid system, and BYD quickly showed its rise.
As a result, hybrid models began to explode, and brands such as Chery, Geely, Chang’an and Great Wall all started the competition in the field of hybrid models.
Honda has also increased the battery of the i-MMD hybrid system and launched a number of PHEV models one after another, but in the context of the outbreak of the hybrid market, it has not caused much market response, and Honda’s passive situation in the new energy market continues.
With the rapid development of autonomous hybrid, the permeability of new energy is also increasing rapidly, breaking through 14% in 2021, 27% in 2022 and 33% in 2023.
The monthly sales of new energy vehicles in July 2024 surpassed that of fuel vehicles, with a market share of more than 50%.
The drastic changes in the Chinese market broke the old model of foreign brands introducing global models into the Chinese market, and they began to make use of the power of the Chinese market to develop “Chinese special cars”.
Try their best to ensure that they will not be abandoned by Chinese consumers, which has prompted them to form a situation in which the Chinese market is out of step with other global markets, and Honda is no exception.
With regard to the differentiated layout of the Chinese market, Honda is not slow from other markets around the world.
As early as 2022, Honda announced that it would stop selling pure internal combustion engine cars in the European market and switch all products to pure electric or hybrid models.
In March of the same year, Honda announced a joint venture with Sony to produce EV cars developed by Sony.
In August, Honda formed a joint venture with LG, LH Battery,LH Battery’s electric vehicle battery plant in Ohio, USA, which began construction in March 2023.
It is no exaggeration to say that 2022 is Honda’s “year of electrification transformation”.
The cooperation again and again is Honda’s determination to turn to electrification in an all-round way.
Compared with Toyota, Volkswagen and other foreign-funded enterprises, Honda’s action is not slow, quite in line with the state that many overseas markets of new energy have just started.
Honda China, entering 2024, the pace of Honda’s transformation is still accelerating.
In February, Honda and Infineon reached a strategic partnership.
Honda chose Infineon as a semiconductor partner to adjust the future product and technology roadmap.
On March 5, Honda and Nissan entered into a strategic partnership to cooperate in software, battery and other electric vehicle-related technology research to save development costs.
On August 1st Mitsubishi Motors signed a memorandum to join the partnership.
In May, Honda and IBM announced that they had signed a memorandum of understanding to jointly develop intelligent technologies such as chips and software for future cars.
On the one hand, Honda’s layout in the field of electrification is moving towards the route of reducing costs and strengthening the competitiveness of its products, which is quite obvious in Honda, Nissan and Mitsubishi alliances.
On the other hand, Honda is also rapidly laying out in the direction of intelligence, in order to establish its own advantages in the era of intelligent electric vehicles.
Different from the relatively active layout of overseas markets, Honda plays more passively in the Chinese market.
In April this year, Honda launched its new electric brand “Ye” in China, and displayed the creation of three models “Ye S7”, “Ye P7” and “Ye GT CONCEPT” based on the brand’s new intelligent pure electric “W” architecture (Architecture W).
The “Ye” brand is also an electrified brand specially built for the Chinese market, just like the previously released “eRom N” brand, except that the “Ye” brand products will come from the newly developed rear-wheel drive and four-wheel drive platform, while the “eRom N” brand models are based on the front-drive platform, mainly producing small and medium-sized vehicles.
Igarashi Fumihiko Yaxing, executive officer of Honda Technology Research Industry Co., Ltd., and minister of China, said that the “Ye” brand and the eRu N brand are Honda’s sincere efforts to accelerate the promotion of electrification strategy, and are full of confidence in this.
From Honda’s point of view, its strategy of adopting two major brands to jointly compete in China’s new energy vehicle market is very sincere, but the competition in China’s new energy market is fierce, and a number of technology companies such as Xiaomi and Huawei have entered the market.
this situation has prompted Chinese consumers to form a state of price sensitivity and high demand for intelligence.
Take the e N brand model that is already on sale as an example, the advantage is that it inherits Honda’s outstanding handling in the field of fuel vehicles, but its performance in terminal price, intelligent cockpit, intelligent driving and other areas is not strong, which is the main reason why Honda e:NS1 sells less than 100 vehicles a month.
If the “Ye” brand still adopts the same development thinking as the eRanger N brand, it is very likely to be the same result.
Under such a background, Honda might as well adopt the open development model of the “Ye” brand, such as Toyota and Huawei develop cockpit, develop smart car with Momenta, pony Zhixing, actively embrace China’s high-quality domestic suppliers to go hand in hand, or it will achieve unexpected results.
From the perspective of the global market, Honda is changing very fast, but from the perspective of the Chinese market, Honda is still half a beat behind.
In addition, Honda needs to understand that the era of manipulative domination is over.
Chinese consumers care more about cool intelligence than they do.
If Honda can combine the two, Honda will achieve better development in the Chinese market.
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