Since the late 1990s, Honda and Dongfeng have been building engines side by side in China, churning out hundreds of thousands of internal-combustion powerplants through a long-running 50-50 joint venture. But that decades-old arrangement may be headed for a dramatic reset.
Earlier this week, Dongfeng officially put its 50 percent stake in the partnership up for sale on the Guangdong United Assets and Equity Exchange. No minimum price has been set, but the deadline for bids is September 12.
According to the filing, the joint venture isn’t small potatoes: last year it reported assets of 5.4 billion yuan ($752 million) and liabilities of 3.3 billion yuan ($459 million). The operation includes a factory staffed by 827 workers, all of whom are now facing an uncertain future.
A Partnership Under Pressure
The move underscores the mounting pressure on traditional engine makers in China. Once a growth engine for foreign automakers, the world’s largest car market has shifted aggressively toward electric vehicles. Local champions like BYD, Nio, and XPeng have surged ahead with competitive EVs, while legacy partnerships like Dongfeng Honda are struggling to adapt.
Dongfeng itself has been losing steam for years. Its annual vehicle sales have tumbled from 3.8 million in 2016 to just 1.5 million in 2023 across its own brand and joint ventures with Honda and Nissan. Selling its stake in the engine plant looks like a bid to pivot resources toward electrification before it falls even further behind.
What Happens Next?
The big question is what Honda will do. The Japanese automaker could step in and buy out Dongfeng’s half, taking full control of the engine operation. Alternatively, it might look for another local partner to keep the venture alive. For now, Honda’s automobile joint venture with Dongfeng remains unaffected.
Still, Honda appears to be hedging its bets. Earlier this year, it launched a new EV designed specifically for Chinese buyers in collaboration with Dongfeng, and at the same time rolled out the GAC Honda GT through its other Chinese partner, GAC Group.
The Bigger Picture
The likely exit of Dongfeng from the engine JV is more than a financial transaction—it’s a signpost for how quickly the old order in China is fading. For two decades, foreign automakers leaned on joint ventures to gain access to the Chinese market, most of them built on the back of internal-combustion technology. Now, as EVs take over, those alliances are being tested, reshaped, or abandoned.
Honda isn’t immune. The question isn’t whether the EV era will change its China strategy, but how quickly—and how decisively—it’s willing to move.
Source: Honda
