Honda President Admits Struggle Against Competition at Shanghai Factory

Honda President and CEO Toshihiro Mibe has issued a stark assessment of the company’s competitive position in China after visiting an auto supplier factory in Shanghai. Following the visit, Mibe stated, We have no chance against this, according to reports from Nikkei Asia.

The remark follows Mibe’s efforts to understand how Chinese domestic companies are able to develop and produce new vehicles in significantly shorter timeframes than traditional global automakers. Upon returning to Japan, Mibe informed suppliers that the company must act quickly to accelerate production speeds.

Declining Market Performance in China

Honda’s struggle to remain competitive in the Chinese market is reflected in a sharp decline in sales. The company’s sales in China fell for the fifth consecutive year in 2025.

The scale of the collapse is evident in the volume of units sold. Honda’s sales peaked at 1.62 million units in 2020, but dropped to 640,000 units by 2025. Projections for 2026 indicate that annual output will fall further, dropping below 600,000 units.

This decline has severely impacted the company’s operational efficiency. Currently, only about half of Honda’s manufacturing footprint in the region is being utilized. This is significantly lower than the 70% to 80% utilization rate typically required for an automotive company to maintain profitability.

Product Cancellations and Financial Losses

The challenges in China have coincided with significant setbacks in Honda’s electric vehicle (EV) strategy. The company recently canceled two of its own electric models, the 0 SUV and 0 Sedan. Honda canceled the revival of the Acura RSX.

Further setbacks include the failure of two Afeela-badged EVs developed in partnership with Sony, which are described as dead on arrival. These developments highlight the difficulty traditional automakers face in establishing profitable business cases for electric cars.

Financially, the company expects to book losses totaling up to $15.8 billion.

The Impact of ‘China Speed’

The primary driver of Honda’s current crisis is the rapid pace of innovation within the Chinese automotive sector, often referred to as China Speed. Local automakers in China have demonstrated the ability to develop a brand-new car model in two years or less.

This speed of development and the strength of the domestic supplier network in cities like Shanghai have created a gap that Mibe suggests is currently insurmountable for the Japanese automaker without drastic changes to their production and innovation cycles.