Recently, Guangqi Honda held the 2023 Manic Dream Festival in Guangzhou. At this event, Guangqi Honda announced a major theme: "New Era of Intelligent Electricity". The theme celebrates the company's sales of more than 10 million units in the Chinese market and accelerates the development of electric and smart vehicles.
However, at the same time as Guangqi Honda announced its new strategy, news of layoffs broke out. According to a report by Nikkei Chinese on December 4, Guangqi Honda plans to lay off about 900 employees at its plant in China, the first large-scale layoff in the 25-year history of the Honda brand's entry into the Chinese market. Guangqi Honda officials explained that the decision was due to the rapid development of pure electric models in China, which led to the impact on the sales of Honda's models in the domestic market, and at the same time, its production was gradually decreasing, so it had to terminate the work of dispatched contract employees.
Is Guangqi Honda on a downward slope?
At present, as we all know, with the rapid rise of domestic new energy brands and the fierce war, almost all traditional car companies have felt the chill brought by the transformation of the times. Japanese cars, once unique in the Chinese market, are now facing a sharp decline in sales, and layoffs and transformation have become their helpless choices.
Guangqi Honda is conservative in nature and appears hesitant in the face of development trends. While Chinese automakers are making all-out efforts to transition to new energy, Honda is still waiting. At the same time, domestic cars continue to innovate in terms of large screens, AI intelligent functions, and assisted driving, while new energy models such as Guangqi Honda's e:NP1 and Accord e:PHEV have not yet formed fist products like Accord in the market, and are facing many business challenges.
In particular, as the first all-electric model, the monthly sales figures of the e:NP1 did not perform well. As of November 2023, the latest monthly sales of the e:NP1 are only 198 units, and the cumulative sales for the year are 4,415 units. The reason for this is that the e:NP1 does not have a significant advantage over its competitors in terms of configuration and price/performance. Similarly, the E:NP2 is also relatively conservative in terms of design and performance, and it is difficult to compete with domestic models in terms of configuration and intelligence.
In addition, the price of electric vehicles produced by Guangqi Honda is on the high side. The market guide price for E:NP1 is 1750-21.800,000 yuan, and as a small SUV, this ** range is close to the level of mid-size cars in independent models, so the excessively high pricing limits its market potential to a certain extent. For most consumers, choosing a more cost-effective domestic electric vehicle is obviously a more reasonable decision. It is also expected that the official guide price of E:NP2 will be relatively high, after all, its positioning is higher than that of E:NP1.
Poor product strength leads to a "butterfly effect".
Guangqi Honda's challenges in the field of new energy vehicles reflect the trend of the market as a whole, especially the gradual decline of Japanese cars in the Chinese market. Taking Guangdong Province as an example, Japanese cars accounted for 44 percent of the local market in 202003% share, but by June of this year, that percentage had dropped to 2977%。This change is mainly due to the rise of domestic brands and new energy vehicles, which are gradually eating into the market share of Japanese cars.
At present, domestic auto brands have the ability to quickly surpass their competitors by virtue of their first-mover advantage in the local market and the flexibility shown in a relatively short development process. In contrast, mature joint venture brands such as Guangqi Honda face obvious challenges in rapidly transitioning from traditional fuel vehicles to new energy vehicles. In addition, the rapid rise of new EV manufacturers has accelerated the pace of development of new energy vehicles, especially on traditional car companies such as Japanese brands.
It is true that if Guangqi Honda's model products can fight, no matter how big the wind and waves can be. However, Guangqi Honda does not seem to have learned and summed up the experience of previous failures.
The most typical example is Guangqi Honda's plug-in hybrid version of the Accord, which is a classic model that is widely popular in the Chinese market, and its 11th-generation version has caused dissatisfaction among users due to the reduction in configuration. This generation of Accord has canceled many important configurations, such as front and rear parking radar, reversing side warning, automatic parking, lane change assistance, front wireless charging, seat ventilation and heating memory, Bose brand audio, induction wipers, etc., these changes have seriously affected the user experience and triggered a word-of-mouth crisis.
In terms of battery performance, the model has an all-electric range of just 82 km, while the all-electric range of the large battery plug-in hybrid models launched by competing Chinese brands during the same period has been increased to more than 100 km. And in order to integrate the battery into the vehicle, Honda had to sacrifice a lot of trunk space.
Although the 11th-generation Accord was launched in 2022 and equipped with CarPlay as standard across the entire series, it lags behind domestic new energy models in terms of intelligence compared with domestic new energy models in the same period. This model has lagged behind domestic new energy models by several generations in terms of intelligent cockpit technology. Even so, the Accord is still able to maintain monthly sales of more than 1,000 units, which reflects that the competition of domestic new energy models has not yet reached the extreme.
This dilemma of the Accord is a microcosm of the challenges Honda faces in the Chinese market. With the sharp decline in sales of fuel vehicles and the mediocre performance of new energy transformation, GAC Honda is facing severe business challenges, which also affects the overall performance of GAC Group. In the first three quarters of 2023, GAC Group's total revenue reached 9765.6 billion yuan, a year-on-year increase of 2221%。However, its net profit was only 451.1 billion yuan, a year-on-year decrease of 4405%, almost halved.
Electric EVs: The line between joint ventures and autonomy is blurring, and Guangqi Honda needs to make a big stride towards electrification
Ten years ago, the landscape of China's automotive market was significantly different from today's. At that time, joint venture automobile brands almost dominated the market, while domestic independent brands were mostly positioned in the low-end market due to technical limitations. These independent brands mainly provide entry-level products, filling the gap in the market that joint venture brands are reluctant to reach. At that time, consumers with a certain desire for automobiles faced relatively limited choices.
However, over time, the market landscape has changed significantly. Self-owned brands have experienced vigorous development, and the rise of the Internet automobile manufacturing industry has also brought new vitality to the market. Today's consumers are faced with far more options when it comes to choosing a car than they did in the past. The market is no longer dominated by joint venture brands, but has been transformed into a market dominated by consumers. Back in the day, consumer choice was limited to a handful of joint venture brands, but that is now a thing of the past.
In addition, the emergence of internet car manufacturers has injected fresh blood into the market. For example, new car manufacturers, such as Wenjie and Qiyuan, have launched a series of innovative automotive products using advanced digital technology and Internet thinking. These products not only lead in intelligent and connected functions, but also show unique advantages in terms of user experience and customized services. This opens up new options for consumers looking for a personalized and high-tech experience. This has also led to the blurring of the boundaries between joint venture brands and domestic brands, resulting in a more diversified and competitive market environment. Therefore, for Guangqi Honda Honda, the electrification transformation cannot tolerate a moment's rest, which is not only a matter of corporate survival, but also determines whether it will be "laid off" by the Chinese market.