Analysis: GAC Honda Fully Acquires Dongfeng Honda Engine Company

2025年12月31日, Dongfeng Honda Engine Co., Ltd. underwent industrial and commercial changes and was renamed GAC Honda Engine Co., Ltd. Dongfeng Motor Group and Honda-related legal entities withdrew, and GAC Honda Automobile Co., Ltd. held 100% of the shares with a registered capital of approximately 970 million RMB, marking the complete integration of engine assets into the GAC Honda system [1].
This change originated in September 2025 when GAC Group approved GAC Honda to acquire 50% of the equity of Dongfeng Honda Engine through public transfer, and completed cash contribution and equity capital increase, turning the engine company into a wholly-owned subsidiary of GAC Honda [1].

• Supply Chain and Operational Control
  : As a core component of passenger vehicles, engine production capacity, quality, and cost directly affect vehicle competitiveness. Now GAC Honda can integrate engine R&D and procurement plans through internal coordination, reducing the complexity of coordinating with external partners, which is conducive to accelerating R&D iteration and cost management of hybrid/fuel models.
• Revenue Structure Optimization
  : Engine manufacturing and parts sales have become profit centers independently controlled by GAC Honda, which helps increase vehicle gross profit and the contribution of parts business, hedging against fluctuations in vehicle sales.
• Hybrid/New Energy Layout Combined with Global Strategy
  : Against the backdrop of Honda’s global “hybrid priority, pure electric adjustment” strategy, GAC Honda can more flexibly allocate engine resources to support multi-power product lines including hybrids (such as hybrid versions of CR-V, Accord, and BREEZE), enhancing powertrain consistency and localization [2].
• Brand Autonomy and Synergy
  : Integrating the engine business into the GAC brand system helps break the image of “relying on joint venture partners for supply”, establish a stronger platform integration capability externally, and lay a solid foundation for future technical synergy with other independent brands under GAC Group (such as sharing hybrid platforms).

• Asset Focus and Resource Redeployment
  : Dongfeng Motor Group’s withdrawal from engine equity releases capital and management resources, allowing it to continue focusing on new energy vehicles, intelligent platforms, and core vehicle businesses, and accelerate localized R&D such as the “Dongfeng Honda New Energy Strategy Office” [2].
• Reduce Operational Redundancy and Strengthen Independent R&D
  : After exiting engine assets, Dongfeng Honda needs to accelerate cooperation with other subsidiaries of Dongfeng Group (such as Dongfeng Parts) in electric drive and electronic control systems to achieve a rapid transition from fuel to new energy systems [2].
• Policy and Market Considerations
  : Considering the accelerated penetration of independent brands and new energy vehicles, Dongfeng Group can invest more capital in high-growth new energy and intelligent fields, and continue to expand its share by leveraging the momentum of double sales breakthroughs (both new energy vehicles and independent passenger vehicles exceeded 1 million units in 2025) [3].

• Simplification of Joint Venture Structure
  : GAC Honda’s acquisition and independent operation of the engine means that Honda’s joint venture business in China is gradually adjusted in the direction of the parent company’s “resource integration + localization”, reducing coordination costs under multi-party joint venture arrangements.
• Response to Honda’s Global “Hybrid Priority” Strategy
  : Against the backdrop of slowing pure electric development and strengthening hybrids, Honda is seeking to stabilize its fuel/hybrid base in the Chinese market. The transfer of engine resource control makes it easier to synchronize production rhythm and capacity supply adjustments, especially in an environment of tight chip supply and flexible production shutdowns (GAC Honda once suspended production due to the Nexperia incident) [2].
• Long-term Synergy
  : The integration of Dongfeng Honda Engine also helps Honda control the localization process of core powertrains (such as 1.5T turbo and hybrid systems), providing stable supply for future hybrid models or exported models in the Chinese market.

This acquisition is not only a key step for GAC Group to enhance control over the vehicle value chain and deepen localization, but also frees up resources for Dongfeng Group to accelerate its new energy and intelligent transformation. At the same time, it reflects Honda’s adjustment ideas around the hybrid and fuel vehicle base in the Chinese market, promoting the differentiated positioning of the two joint ventures in different strategic tasks through capital-level restructuring. Facing the rapidly developing competitive landscape of new energy vehicles and intelligent mobility in the Chinese market, GAC Honda’s acquisition of the engine business can provide strong support for its supply chain stability, cost optimization, and rapid product response, while Dongfeng Group can focus more on new energy investment and independent R&D, forming a strategic posture of respective focus.

[1] Eastmoney - “GAC Honda Completes Acquisition of Dongfeng Honda Engine Company” (https://finance.eastmoney.com/a/202601043607864696.html)
[2] 36Kr - “After Tariffs and Chip Shortages, How Can Honda Break Through With Halved Profits?” (https://m.36kr.com/p/3600927112577283)
[3] Sina Finance - “Dongfeng Motor: New Energy Vehicles and Independent Passenger Vehicles Both Exceed 1 Million Units in 2025” (https://finance.sina.com.cn/jjxw/2025-12-26/doc-inheayzp2757018.shtml)