April 12 2005.
Honda Motor Co. plans to stop manufacturing motorcycles at its joint venture in Chongqing because the firm is finding it increasingly difficult to compete with larger Chinese producers.
The joint venture, Jialing-Honda Motors Co., began making motorcycles in 1996. Last year, the company sold 54,000 motorcycles with 125cc engines, and its production level peaked at 60,000 units in 2003. It concentrates on inexpensive models priced at or less than 10,000 yuan, or about 130,000 yen.
In a market where some firms produce upward of 1 million motorcycles a year, "Sales of only 50,000 units translates into poor competitiveness," according to a Honda official. After obtaining approval from the Beijing government, Honda will cease production at Jialing-Honda Motors and shift it to other bases, including facilities in Shanghai, Tianjin and Guangzhou.
Jialing-Honda intends to specialize in manufacturing general-purpose engines for household power generators, pumps and lawn mowers, of which it sold 250,000 units last year. It is targeting sales of 360,000 engines as demand for power generators grows due to electricity shortages throughout China.

Source: The Nihon Keizai Shimbun