Honda and GAC Group to build $430 million Chinese plant for new-energy cars

October 31, 2018

By Norihiko Shirouzu and Yilei Sun

BEIJING (Reuters) – Honda Motor Co’s <7267.T> joint venture with GAC Group <601238.SS><2238.HK> will invest 3.27 billion yuan ($469 million) in new-energy vehicle production in China, GAC said in a stock exchange filing on Wednesday.

The move is part of Honda and GAC’s push to meet China’s stringent green car quotas.

The Honda-GAC joint venture will build a new plant with capacity to produce 170,000 new-energy vehicles a year, the filing said. New-energy vehicles include all electric battery cars as well as plug-in hybrid vehicles.

A source close to the joint venture said that the plan envisages Japan’s Honda producing GAC’s Trumpchi GS4, a battery powered compact SUV, to sell through Honda outlets operated with GAC.

The Honda-produced car is likely to be sold with the Trumpchi badge rather than Honda’s, the source said, declining to be named because he is not authorized to speak on the matter.

It is a highly unusual arrangement but provides a quick way to meet Beijing’s requirements for such vehicles to represent 10 percent of an auto manufacturer’s production by 2019.

The deal is similar to an earlier one between Toyota Motor Corp <7203.T> and its local partner. Toyota showrooms will sell an electric vehicle without the Japanese company’s distinctive triple-oval logo. Instead, it will feature the label of its Chinese partner GAC and be built using GAC’s lower-cost technology.

($1 = 6.9717 Chinese yuan renminbi)

(Reporting by Norihiko Shirouzu and Yilei Sun in Beijing; Editing by David Goodman)

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