One of Honda's joint venture partners in China is getting ready to bail

Dongfeng is preparing to sell its stake in its engine joint venture with Honda according to filings with the Guangdong assets and equities exchange.

A price for the state-owned automaker’s 50 per cent share in the joint venture has not been set, and bids will be accepted until September 12.

Honda has not committed to buying out Dongfeng’s share, and it’s unclear whether there are any other companies interested. In a statement to The Nikkei, Honda said it would “consider various possibilities” about what to do next.

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Established in 1998, the engine maker has 827 employees. Its assets are valued at ¥5.4 billion (A$1.2 billion), and it has ¥3.3 billion (A$715 million) in debt.

Last year the engine joint venture lost ¥228 million (A$49 million) as Chinese consumers continued their rapid embrace locally-developed EV models.

According to Bloomberg, Dongfeng’s sales have been fallen dramatically over the past few years. After peaking at 3.8 million sales in China in 2016, the company’s sales slid to just 1.5 million last year.

Sales are reportedly down 10 per cent during the first half of 2025, and Dongfeng’s profits have dropped 90 per cent.

Dongfeng operates joint ventures with Honda and Nissan. In addition to this it also manufactures cars for sale under its own brand, as well as Voyah, M-Hero, Aeolus, and Forthing.

Nissan has been leaning on Dongfeng’s “new energy” platforms and technology to expand its plug-in hybrid and EV lineup in China. This year’s launches include the Frontier Pro PHEV ute, and the electric N7 sedan.

Honda has two joint venture partners in China: GAC and Dongfeng. For most of the models it makes and sells in China there are two versions, often with cosmetic and naming differences. The Civic, for example, is a Dongfeng Honda product, while the almost identical Integra is made and sold by GAC Honda.

Neither Dongfeng or Honda have indicated whether the structure of their car manufacturing partnership is under review. Currently each automaker holds a 50 per cent share in Dongfeng Honda.

When the Chinese government opened up the country’s automotive market, they required overseas carmakers to form joint ventures with local manufacturers with a maximum 50 per cent stake for the foreign firm.

In the last decade these rules have been loosened up. Foreign manufacturers are able to buy out their existing partner, although few have gone down this route, BMW being one notable exception. Overseas carmakers can also setup factories without a local partner, with one prominent example being Tesla.

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