China’s Dongfeng Exits Honda Engine JV Amid EV Push

China’s Dongfeng has put its 50% stake in Dongfeng-Honda Engine up for sale as part of a strategy to reduce exposure to combustion engine assets and redirect capital toward electric vehicle (EV) development. The move comes amid intensifying competition in China’s auto market and a rapid shift toward new energy vehicles.

The sale was confirmed via a filing on the Guangdong United Assets and Equity Exchange, where the listing appeared on Monday. The reserve price has not yet been disclosed. According to audited 2024 results, Dongfeng Honda Engine held assets of CNY¥5.4 billion (US$752 million) against debts of CNY¥3.3 billion and reported a net loss of CNY¥227.8 million.

Established in Wuhan in 2003 as a 50-50 joint venture with Honda, the company has been a key supplier of internal combustion engines for Honda vehicles produced in China. No details have been released regarding potential buyers or a timeline, though the listing expires on Sept. 12.

Dongfeng described the sale as part of its strategy to “simplify combustion engine assets and accelerate the redirection of capital and resources toward new energy sectors.” As one of China’s largest state-owned automakers, it has been restructuring operations as EV and hybrid models gain market share.

The China Passenger Car Association (CPCA) has characterized the sector as a “price war,” with traditional automakers under pressure from local competitors such as BYD. Competition is expected to remain strong through 2025, further challenging combustion-focused players.

Following the announcement, Honda shares rose 1.2%, in line with broader market trends, while trading of Dongfeng shares was temporarily suspended. If completed, the sale would be Dongfeng’s largest since 2022, when it sold a 1.58% stake in Stellantis for €934 million.