Honda Postpones Hybrid Vehicle Production in China image

A Honda official said that the automaker will postpone the beginning of gasoline-electric vehicle production in China as the company tries to source cheaper parts.

Honda’s previous plan was to start production of hybrid cars in China in 2014, but today, June 14th, the company announced that it will delay production by three years to source cheaper components from the local parts supplier. The automaker offered no information about what type of components it wants to source or the joint venture companies it plans to collaborate with.

“Affordability is critical,” said Natsuno Asanuma, the Honda spokeswoman in Beijing.

Since 2009 China has been the biggest auto market in the world, but sales of hybrid vehicles have not been as high as expected. But analysts expect this to change soon as Beijing looks to boost subsidies to encourage sales of new-energy vehicles. Honda’s announcement comes soon after Toyota said it will try to source hybrid parts in China to cut costs of hybrid vehicles.

Toyota plans to manufacture in China batteries for gas-electric hybrid vehicles, a move adopted by other automakers in China, in an attempt to kick-start sales of hybrids in the region. Currently China offers generous subsidies for purchases of heavily electrified “near all-electric” plug-in hybrids and all-electric battery vehicles, but only limited support for the conventional gas-electric hybrid cars.

Source: Reuters