Honda is Stepping Up its Game in China

Honda Motor (NYSE:HMC) has announced its decision to launch 10 more car models in China by 2015. The motor company plans to narrow the gap with foreign rivals in the world’s largest auto market, as sales in China are expected to double in 2015.

Honda is anticipating China’s growing market will help the company recover after sales were affected by natural disasters in Japan and Thailand last year, which caused Honda’s global output to plummet by a fifth to 2.91 million cars. The head of Honda’s China operations, Kuraishi Seiji, announced that the company will focus on bringing new products to be developed for the Chinese market. He said that Honda plans to bring new upgraded models that include China-focused small cars, a major growth driver in the country.

Mr. Seiji also wants to cut procurement costs and lower vehicle selling prices in China to improve competitiveness. Honda’s Civic sells for $25,400-$26,900 in China, a higher price range than competing brands. Honda sold 617,764 cars in China last year, while Volkswagen sold 2.26 million and General Motors (NYSE:GM) sold 2.55 million. Nissan Motor sold twice as many cars during the period, and Toyota Motors (NYSE:TM) sold 43 percent more than Honda last year in China, though hit just as hard by supply chain disruptions.

Honda plans to bring more high-end cars like its Acura line to China because luxury vehicles are racing ahead in the market. The growing moneyed class are responsible for the more than 35 percent gain in BMW, Mercedes-Benz, and Audi sales last year. Honda will reveal its Acura ILX and RDX this year and the RLX in 2013.

Honda works in partnership with Dongfeng Motor Group Co and Guangzhou Automobile Group Co. The automaker will produce electric vehicles with Guangzhou Auto by the end of the year, competing with Volkswagen, Nissan, and other rivals for China’s green car potential.