Honda Motor said this week it planned to close a vehicle assembly plant in China and suspend production at another, to step up its transition to zero-emission vehicles.

The move is part of a broader review of the company’s global operations with the automaker having already announced earlier this month plans to consolidate vehicle production at one of its two assembly plants in Thailand from 2025 due to overcapacity.

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Honda has struggled in China with falling demand for internal combustion engine (ICE) vehicles with local new energy vehicle (NEV) manufacturers behind much of the moderate domestic market growth in the last two years.

Honda’s sales in China fell 10% to 1,234,181 units in 2023, split more or less evenly between its two main joint ventures (JVs), GAC Honda and Dongfeng Honda, which delivered 620,469 and 613,712 vehicles respectively. Combined production amounted to 1.2m vehicles.

Honda said it would permanently close one of its GAC JV plants in October. The facility has capacity of 50,000 vehicles per year and makes the Accord sedan.

Honda also said it would suspend production at one Dongfeng JV plant with annual capacity of 240,000 vehicles, in November.

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A company spokesman said Honda’s annual capacity in China would drop to 1.2m vehicles following the cuts from 1.49m now.

Honda was also scheduled to complete construction of two new battery electric vehicle (BEV) plants with its JV partners this year, each with capacity of 120,000 units, which would lift its annual capacity in the country back to 1.44m units.

The automaker plans to step up BEV exports from its Chinese operations in the next few years.