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Honda moves to cut China workforce with voluntary layoffs

FILE PHOTO: New York International Auto Show Press Preview

TOKYO (Reuters) -Honda Motor is scaling down its full-time production workforce in China, with roughly 1,700 employees having agreed to leave thus far, the Japanese automaker said on Wednesday, as its car sales in the world's biggest auto market decline.

GAC Honda Automobile, a joint venture (JV) between Honda and Chinese state-owned automaker Guangzhou Automobile Group, told workers earlier this month it was seeking to make voluntary layoffs, a Honda spokesperson said.

Honda's move marks the latest setback for Japan's legacy car brands in China, where the growing dominance of local players such as BYD and a brutal price war are causing them to lose market share.

Chinese consumers are shifting away from internal combustion engine cars to electric vehicles and plug-in hybrids, segments in which Japanese brands struggle to compete with local rivals.

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The Honda venture's roughly 1,700 workers who agreed to voluntarily retirement amount to 14% of its production staff, according to the spokesperson.

The venture is considering for how many workers it will accept voluntary retirement, the spokesperson said, adding the final figure may come out different from the 1,700 workers who asked to leave so far.

Honda operates four factories in China through the venture that traces its roots to the late 1990s, and three other factories through another JV with Dongfeng it set up in 2004.

Passenger vehicle sales in China, the world's biggest auto market, fell 5.8% in April from a year earlier, according to data from the China Passenger Car Association, amid intensifying price competition and consumers' caution about spending on big items during a shaky economic recovery.

(Reporting by Daniel Leussink in Tokyo and Roshan Thomas in Bengaluru; Editing by Alan Barona and Lincoln Feast)