Dongfeng Motor Group reportedly plans to sell its 50% stake in Dongfeng Honda Engine Co., Ltd. Joint venture with Honda Motor Co., according to an Aug. 18post on the official website of Guangdong United Property and Equity Exchange. The project is in the pre-listing phase, with no reserve price set, and the deadline is Sept. 12.
According to the audited figures in the listing documents, Dongfeng Honda Engine was valued at RMB 5.4 billion (approximately USD 752 million) in 2024. The company posted a net loss of RMB 227.8 million for the same period, carries liabilities of RMB 3.3 billion.
According to the official website of Dongfeng Honda Engine Co., Ltd., the company was established in 1998. Its shareholders are Dongfeng Motor Corporation, Honda Motor Co., Ltd., and Honda Motor (China) Investment Co., Ltd., holding 50%, 40%, and 10% of the shares respectively.
Headquartered in Guangzhou, the company is mainly responsible for the development, production, and sale of automobile engines and their components for passenger cars and provides corresponding after-sales services. Its products are primarily supplied by the passenger-vehicle model manufactured by GAC Honda. At present, the company has an annual production capacity of 480,000 complete engines and over 650,000 sets of parts and components.
Dongfeng Motor Group’s plan to divest its engine business underscores how fierce competition has become amid China’s rapid shift toward electric vehicles. Japanese automakers—including Honda, Toyota, and Nissan—have lagged in electrification and are now confronting strong headwinds from domestic brands such as BYD.
Competition among China’s home-grown automakers is also intensifying. Data from the China Automotive Technology & Research Center show that Dongfeng Motor, which operates joint ventures with both Honda and Nissan, saw its annual deliveries fall from a peak of 3.8 million units in 2016 to 1.5 million units last year.
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PSR Analysis: Dongfeng’s sale of its stake in Dongfeng Honda Engine is a textbook case of “off-loading fossil-fuel assets and shifting capital into new-energy vehicles.” By divesting the engine plant, Dongfeng is restructuring its portfolio: it sheds a loss-making, high-debt fossil-fuel asset, pockets a lump-sum cash inflow, lowers its leverage, and channels the freed-up resources into its EV and self-owned passenger-car businesses.
Since 2024, China’s new-energy passenger-vehicle penetration rate has exceeded 50% for six consecutive months, while retail sales of traditional-fuel vehicles have been falling by roughly 15% per year. DHEC’s sole vehicle customer—GAC Honda—sold only 171,000 units from January to July 2025, down 29% year-on-year, and its parent, Honda Motor China, delivered 360,000 vehicles in the same period, a 23% decline. This shrinking demand has directly eroded DHEC’s engine orders and compressed its capacity utilization.
The surge of domestic new-energy vehicles has pushed joint-venture fuel-car sales and profits into a simultaneous decline; some players are now bleeding cash at an accelerating pace. With China VI emission rules tightening, any further investment in conventional powertrain capacity offers dismal returns. Consequently, several major joint ventures—including Nissan, Honda, General Motors, and SAIC Volkswagen—have announced plans to cut output or shrink capacity, and the scale of these reductions is still expanding. PSR
Jack Hao is Senior Research Manager – China for Power Systems Research
