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Chinese automaker Dongfeng Motor is offering its 50% stake in Dongfeng Honda Engine, a joint venture with the Japanese automotive giant, for sale in an effort to expedite its transition toward new energy vehicles. The company has not yet announced a reserve price, but the listing is set to close by September 12, according to a notice published on the Guangdong United Assets and Equity Exchange website.
Honda Motor maintains a 40% ownership stake in Dongfeng Honda Engine, with Honda Motor China Investment holding the remaining shares. As China’s new energy vehicle (NEV) market continues to expand, local and joint venture automakers are facing mounting difficulties. Dongfeng Motor highlighted its plan to optimize and restructure its internal combustion engine assets to better support Honda’s growth in China, while also accelerating its shift toward NEVs.
Founded in 1998 in Guangzhou, Dongfeng Honda Engine turned a profit of CNY 371 million (approximately USD 51.6 million) in the first half of this year, despite experiencing a 60% revenue decrease to CNY 3.8 billion (around USD 532 million) compared to the previous year. The company currently employs 827 workers.
Dongfeng Motor faces fewer challenges with NEV profitability because separate assessments of NEV operations have been conducted for three major state-owned automakers, a company spokesperson told this publication. This arrangement allows the automaker to allocate more resources to its independent NEV initiatives, pursue innovative operational strategies, and assist in electrifying its joint ventures.
The spokesperson also noted that Dongfeng Motor considers its role in developing Dongfeng Honda Engine to be largely complete. Prior to this announcement, market rumors suggested that GAC Honda, the Chinese joint venture between Honda and GAC Group, might acquire the 50% stake in Dongfeng Honda Engine. A Honda China representative stated that only officially disclosed information is available.
In the first half of the year, GAC Honda’s sales declined by 26% to 154,647 units, while Dongfeng Honda’s sales dropped 37% to 148,990 units. Honda China’s total sales last year fell 31% to 852,300 units, with the company closing its Guangzhou and Wuhan joint venture factories and reducing annual internal combustion engine production capacity from 1.49 million to 1 million units.
Revenue forecasts suggest that Dongfeng Motor’s net profit could have plummeted between 90% and 95% during the first half of this year, amounting to roughly CNY 30 million to CNY 70 million (USD 4.2 million to USD 9.8 million).
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