Honda and GAC extend China joint venture contract until 2038
The Japanese carmaker and its Guangzhou-based partner will continue operating GAC Honda as they seek to strengthen the business despite weak vehicle demand.
- Honda and Guangzhou Automobile Group (GAC) have extended their joint venture contract in China, with the new agreement lasting until 2038.
- The renewal replaces the previous contract, which was set to expire in 2028, removing uncertainty about the partnership's future.
- This extension was agreed upon despite challenges such as weakening vehicle sales in the Chinese market.
- The joint venture, GAC Honda Automobile Co., was originally established in 1998 and the renewed partnership aims to strengthen Honda's business in China.
Honda Motor Co. announced on Monday (July 20) that its partnership with Guangzhou Automobile Group Co., known as GAC Group, will continue until 2038 after the two companies agreed to extend their joint venture contract.
The agreement was signed in early July, removing uncertainty over the future of the partnership as its previous contract was due to expire in 2028.
Questions over whether the venture would continue had intensified amid weakening vehicle sales in China.
Honda said the companies would “fully leverage” their respective technologies and resources while continuing to offer products “that meet the diverse needs of customers”.
The Japanese carmaker said the renewed partnership would help strengthen its automobile business in China.
The two companies established GAC Honda Automobile Co. in 1998.
Based in Guangzhou, the capital of Guangdong province in southern China, the venture manufactures the Accord sedan and the Avancier sport utility vehicle.
One of GAC Honda’s plants has been closed since July because of poor sales.
State-owned GAC Group holds a 50 per cent stake in the venture, while Honda owns 40 per cent and Honda Motor (China) Investment Co. holds the remaining 10 per cent.
[Copyright The Jiji Press, Ltd.]
