‘We Don’t Stand a Chance Against This’

It could be said that Honda is in trouble. It recently canceled two of its own electric vehicles, 0 SUV and 0 Sedan, along with the revival of the Acura RSX. This would result in losses of up to $15.8 billion, and that’s not all. Two Afeela-badged electric vehicles developed with Sony were also dead on arrival. It’s a worrying sign of how some traditional automakers are struggling to create a profitable business for electric cars.

But the problem goes beyond electric vehicles. Like many long-established brands, Honda has had difficulty remaining competitive in China. Sales have plummeted in just a few years, from a peak of 1.62 million in 2020 to just 640,000 units in 2025. Only about half of the production footprint is utilized, well below the 70–80 percent the auto industry typically needs to turn a profit. For 2026, annual production is projected to fall below 600,000 units.

Honda CEO and President Toshihiro Mibe recently traveled to China to gain insight into how the domestic company produces so many products in such a short period of time. After visiting a car supplier’s factory in Shanghai, he made a firm statement: “We have no chance of opposing this,” Nikkei Asia report.

You may have heard about “China Speed” and how local automakers can develop new models in two years or less. By comparison, legacy brands often take twice as long, and sometimes even longer, to engineer new products. With so many companies developing vehicles at such a rapid rate, it’s no surprise that China seems to launch a new car every other day.

Chinese suppliers were not only able to match this speed but also did so with cost efficiencies that the industry’s biggest companies can only dream of. However, Mibe’s statement should not be seen as an admission of defeat. Upon returning from China, Honda’s CEO told suppliers, “We must act quickly” to speed up development.

To achieve these goals, Honda reinstated its independent research and development division by relocating thousands of engineers to newly established engineering subsidiaries. The government is expected to operate with greater autonomy than in the past six years, when development was centralized, and the central office took control. Whether this added creative freedom will turn things around is unclear, although it’s reasonable to assume that major decisions will still be made at Head Office.

Honda leadership isn’t the only one sounding the alarm across the supply chain. In an October 2025 interview with CBS Sunday MorningFord CEO Jim Farley didn’t mince words either:

“They have had enough [production] capacity in China with existing factories to serve the entire North American market, putting us all out of business.’

The same thing happened to former Toyota CEO, Koji Sato, who recently told suppliers in a meeting with representatives from 484 companies that if things did not change, the company’s existence would be threatened:

‘Unless things change, we won’t survive. I want everyone to acknowledge this feeling of crisis.’

When Toyota, the world’s largest automaker for six years in a row, makes such a statement, how serious the situation becomes. China has become an automotive giant and a force to be reckoned with, not only within the country but also in the global market.

Take Europe, for example, where BYD controlled 1.8 percent of total sales during the first two months of this year. According to registration data published by European Automobile Manufacturers Association (ACEA), SAIC was on par with Nissan at 1.9 percent, far above Honda’s 0.5 percent in February.

Motorcycle Pickup1: Honda is the latest major automaker to warn of how serious the situation is. China is developing and manufacturing cars at a speed and cost unmatched by any other industry. Long-established companies have had to adapt to survive, either independently or in partnership with Chinese automakers. Whatever happens, incumbents need to rethink their modus operandi to avoid being overtaken by China’s rapid growth.