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January 9, 2018

GAC Honda to take control of Honda Automobile China

GAC Honda Automobile plans to acquire the 25% stake in Honda Automobile (China) Co Ltd held by its parent company GAC Group, according to local reports, as part of a larger move to take over the entire company.

GAC Honda Automobile plans to acquire the 25% stake in Honda Automobile (China) Co Ltd held by its parent company GAC Group, according to local reports, as part of a larger move to take over the entire company.

GAC Honda aims to consolidate the two companies under one roof to help improve efficiency and capacity utilisation. The transfer of the 25% stake is valued at CNY232m (US$36m).

Japan's Honda Motor currently controls 65% of the equity in Honda Automobile (China), which has a 60,000 unit/year plant in Guangzhou province producing small and medium-size cars mainly for export to Europe, North America and the Middle East.

To take full control of the joint venture GAC Honda will need to acquire Honda Motor's stake, which the Japanese company has already agreed to – according to the Shanghai United Assets and Equity Exchange.

At the beginning of the month Dongfeng Motor Group put its 10% stake in Honda Automobile (China) up for sale through a public listing, which GAC has been buying up on the open market.

GAC Honda, 50%-owned by GAC Group and 50% by Honda Motor, has a current production capacity of 600,000 vehicles per year across three plants in China. This will increase to 720,000 units with the completion of the expansion of the third plant scheduled for mid-2019.

Honda Motor also has another major joint venture in China with Dongfeng Motor Group, called Dongfeng Honda Automobile Co Ltd, in which both partners also own 50% of the equity. It has an annual production capacity off 520,000 vehicles per year.

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