Honda’s China joint venture dismisses 900 contract workers

A staff member cleans Honda brand's accord sedan model at the booth of Guangzhou Automobile Group during the Auto China 2016 auto show in Beijing

A staff member cleans Honda brand’s accord sedan model at the booth of Guangzhou Automobile Group during the Auto China 2016 auto show in Beijing, China, April 26, 2016. REUTERS/Kim Kyung-Hoon/File Photo Acquire Licensing Rights

TOKYO, Dec 2 – Honda Motor (7267.T) said on Saturday it was dismissing about 900 contract workers at a joint venture in China, as Japanese automakers suffer from a rapid shift to electric vehicles in the world’s largest car market.

“Production volume is decreasing, so dispatch contracts are terminated in line with that,” the spokesperson said of the employees, hired through dispatch agencies, at Honda’s venture with China’s state-owned Guangzhou Automobile Group (601238.SS).

The reduction amounts to about 7% of the venture’s workforce of about 13,000, the spokesperson said, declining to say for which models production was being cut.

Toyota Motor (7203.T) has halted production on some ageing lines at a joint venture in China, a spokesperson said on Saturday after a media report that it was partially suspending production due to weak sales.

Honda, Japan’s biggest automaker after Toyota, is facing strong headwinds in China.

Its production there was down by about a fifth for the first 10 months of the year compared to the same period last year.

Honda sold 3.2 million vehicles worldwide in January-October, helped by robust demand in the United States. Sales in China, accounting for 30% of the total, fell nearly a fifth from a year earlier.

Reporting by Daniel Leussink; Editing by William Mallard

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