Honda Motor Co (TYO:7267) is restructuring its engine business in China, changing the ownership of its local joint ventures to improve efficiency before a key partnership review in 2028, Nikkei reported Tuesday.

Dongfeng Motor Group (HKG:0489) plans to sell its entire stake in the 50-50 engine unit Dongfeng Honda Engine after more than two years of negotiations. The Japanese automaker's JV with Guangzhou Automobile Group (SHA:601238), GAC Honda Automobile, plans to buy the shares and make the engine business a wholly owned subsidiary by year's end, according to the report.

The engine venture posted a net loss of 227 million yuan in the year ended December 2024, amid weakening demand for gasoline engines as EVs and plug-in hybrids dominate new auto sales, the report said.

Honda began ownership negotiations in 2023, citing pricing and profit allocation disputes, and said the restructuring could enable clearer cost disclosure, joint procurement and greater operational efficiency, according to the report.

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