Dongfeng to Sell 50% Stake in Honda Joint Venture Amid Shift to Electric Vehicles

Dongfeng Motor Group is selling its 50% stake in a joint venture with Honda, a reflection of China's shift to electric vehicles. The Guangzhou-based Dongfeng Honda Engine Co. has been valued at $752 million and has debts of $753 million. Honda has been struggling in the Chinese market, with production capacity at the Guangzhou engine plant slashed by half and a new EV production line set up with another Chinese partner. The joint venture's annual deliveries have declined from 3.8 million vehicles in 2016 to 1.5 million last year.

State-owned Chinese automaker Dongfeng Motor Group Co. has announced the sale of its 50% stake in a joint venture with Honda Motor Co., reflecting China's rapid shift away from gasoline-powered vehicles. The Guangzhou-based Dongfeng Honda Engine Co., founded in 1998, produced engines for Honda vehicles in China. The company listed its stake for sale on the Guangdong United Assets and Equity Exchange on Monday, with a reserve price yet to be set and a listing deadline of Sept. 12 [1].

The company's assets were valued at 5.4 billion yuan ($752 million) last year, when it recorded a loss of 227.8 million yuan, and it has debts of 3.3 billion yuan, according to audited results included in the listing document. The factory employs 827 workers.

The divestment underscores the intense competition in China's fast-paced shift to electric vehicles (EVs). Japanese brands including Honda, Toyota Motor Corp., and Nissan Motor Co. have been struggling to keep up with domestic champions like BYD Co. Honda, for instance, has slashed production capacity at the Guangzhou engine plant by half and set up an EV production line in the same city with another Chinese automaker partner [1].

Dongfeng's annual deliveries have declined from a peak of 3.8 million vehicles in 2016 to 1.5 million last year, according to data from the China Automotive Technology and Research Center. The company's joint ventures with Honda and Nissan have seen similar declines, indicating the intense pressure on traditional automakers to adapt to the EV revolution [1].

The sale of Dongfeng's stake in the joint venture with Honda is a strategic move as the company seeks to realign its portfolio with the country's transition to EVs. The divestment also highlights the financial challenges faced by traditional automakers in the face of technological disruption and increased competition.

References:
[1] https://www.bloomberg.com/news/articles/2025-08-18/dongfeng-motor-to-sell-50-stake-in-joint-venture-with-honda
[2] https://brief.bismarckanalysis.com/p/byd-is-on-track-to-become-the-largest