On April 23, 2026, Honda dropped a bombshell announcement: it is withdrawing from South Korea's car market by the end of 2026. In 23 years of operations, Honda sold a grand total of just 108,600 cars there. And this isn't an isolated retreat. From June, Honda will idle Chinese factories. The Sony-Honda AFEELA EV is dead. North American EV plans are scrapped. What on Earth is happening to Japan's #2 automaker, and how is the map of the global auto industry being redrawn?

23 Years in Korea, Only 108,600 Cars Sold

On April 23, 2026, Honda Korea held a press conference in Seoul and announced that it will end four-wheeler sales in South Korea by the end of 2026. Honda first entered the Korean market with motorcycles in 2001, then launched automobile sales in 2003–2004. A 23-year chapter is closing.

The numbers tell the story. Over 23 years, Honda Korea sold a cumulative 108,600 passenger cars, an average of roughly 4,700 units per year. Given that Honda's annual global sales are around 4.1 million vehicles, the Korean business represented less than 0.1% of Honda's global volume.

In recent years, Honda Korea's lineup had shrunk to just two models: the Accord midsize sedan and the CR-V SUV. Models like the Odyssey and Civic had been quietly phased out as sales volumes failed to justify their presence.

CEO Lee Ji-hong explained the decision at the press conference, citing "changes in the environment surrounding the global and South Korean automobile markets, and exchange rate fluctuations," and the need to "concentrate corporate resources to strengthen mid- to long-term competitiveness." Honda Korea will instead focus on its motorcycle business, where it has sold a cumulative 420,600 units and holds the top market share, while continuing after-sales service (maintenance, parts, warranty) for existing car owners.

Why Honda Couldn't Crack Korea: Three Walls

Wall #1: The Hyundai-Kia Fortress

South Korea is one of the few major markets where domestic brands command over 80% of total sales. Hyundai Motor Group, comprising Hyundai and Kia, accounts for more than 80% of South Korean domestic car sales. The remaining sliver, roughly 270,000 units annually, is fought over fiercely by imported brands. And within that import market, German brands (BMW, Mercedes-Benz, Volkswagen, Audi) dominate, accounting for about 68% of import sales in early 2025.

Japanese brands were always a minority within a minority.

Wall #2: The Lasting Scars of the 2019 "No Japan" Boycott

In 2019, escalating diplomatic tensions between Japan and South Korea, rooted in disputes over wartime forced labor and export controls, triggered a sweeping consumer boycott known as the "No Japan" movement. Japanese cars were an especially visible target. In August 2019, Honda's Korean sales plunged 81% year-on-year. For the full year, the combined sales of the five Japanese brands fell 44%, a catastrophic blow from which brand positioning has never fully recovered.

Japan-Korea relations have thawed considerably since then, and Japanese car sales slowly recovered from the mid-2020s onward. But Honda, lacking a compelling hybrid lineup and relying on just the Accord and CR-V, couldn't ride the recovery the way Toyota and Lexus did.

Wall #3: Missing the Hybrid Boom

In April 2025, approximately 64% of all imported cars sold in South Korea were hybrids, one of the highest hybrid penetration rates in any major market. High interest rates and cooling EV enthusiasm pushed Korean consumers toward hybrids as the pragmatic compromise: no charging anxiety, excellent fuel economy, no range limits.

Toyota and Lexus rode this wave masterfully. Lexus's Korean sales rose 29% year-on-year in early 2025. Honda, lacking equivalent hybrid offerings tailored for the Korean market, watched the hybrid boom pass by.

This Is Not Just About Korea: Honda's Simultaneous Global Retreat

The Korean exit matters most for what it reveals about Honda's broader strategic reallocation. In recent months, Honda has been shutting down operations on an extraordinary scale.

China: Factory Shutdowns and Trillions in Losses

Honda is dramatically cutting its production capacity in China. Some factories are reportedly scheduled to go idle starting in June 2026. Chinese EV makers, BYD, Geely, Xpeng, Xiaomi, have overwhelmed Japanese brands with aggressive pricing and rapid product cycles, causing a collapse in Japanese market share. Combined with EV-related write-downs, Honda's total loss processing could reach ¥2–3 trillion ($12.6–18.8 billion at ¥159/USD).

AFEELA: The Sony Partnership's Dream EV Dies

The joint Sony-Honda Mobility EV "AFEELA 1," which dazzled audiences at CES since 2023, had its development officially cancelled in 2026. A sticker price north of $90,000 for 300 miles of range simply couldn't compete with the BYD Seal and other Chinese EVs. Sony and Honda are now discussing the future form of the joint venture itself, including whether the company will continue to exist in its current structure.

North America: Honda 0 Series and Acura RSX Scrapped

The three EVs unveiled at CES 2025, the Honda 0 SUV, Honda 0 Saloon, and Acura RSX, had their development and launch cancelled in March 2026. Slowing North American EV demand, EV subsidy rollbacks under the Trump administration, and cost burdens from the LG battery joint venture combined to push Honda toward its first-ever annual net loss since going public.

The Four Markets Honda Is Betting Everything On

While withdrawing from multiple fronts, Honda has explicitly identified four markets to concentrate on:

First, the United States. Despite tariff uncertainty, the US remains Honda's single largest global market. The hybrid CR-V and Acura SUVs are the anchors.

Second, the Japanese domestic market. The N-Box mini-vehicle has been Japan's overall best-selling car for four consecutive years, a rock-solid home base.

Third, India. Honda is accelerating its small-car and EV strategy for India, including the upcoming "Honda 0 α (Alpha)," targeting the world's third-largest auto market.

Fourth, ASEAN. Thailand, Vietnam, Indonesia, Japanese brands traditionally hold strong positions in Southeast Asia, and Honda plans to reinforce its motorcycle and four-wheeler presence here.

Korea's exit is a logical consequence of this "focus and concentrate" logic. Rather than deploy resources in markets selling only a few thousand cars per year, Honda is redirecting investment to markets measured in millions. Strategically rational, but also a striking sign that the global footprint of Japanese automakers is shrinking rapidly.

The Contrast With Hyundai: Japan Retreats, Korea Expands

After Honda's withdrawal, the Japanese brands still selling four-wheelers in Korea will be Toyota, Lexus, and (a diminishing) Nissan/Infiniti. Toyota and Lexus, backed by hybrid strength, are actually growing in Korea.

The contrast with Hyundai Motor Group's trajectory is stark. Since 2016, Hyundai-Kia's North American sales grew from 1.5 million to 2.13 million units (+42%), and European sales from 930,000 to 1.25 million (+34%). The new "Metaplant" EV factory in Georgia is operational, and models like the IONIQ 5 and EV9 are winning acclaim.

In short: Japanese automakers are selectively retreating from global markets while Korean automakers are aggressively expanding into them. The balance of power is shifting.

What May 2026 Will Reveal

Within Japan, opinion is divided. Some view Honda's Korea exit as rational: "Selling 100,000 cars over 23 years in a 7.5% import market isn't efficient, the decision is overdue." Others see it as hasty: "Korea is geographically close; it could have served as an after-sales hub."

The bigger story many analysts expect: this is a prelude to the mid- and long-term strategy CEO Toshihiro Mibe is scheduled to announce in May 2026. Korea, China, AFEELA, North American EVs, clearing so many projects simultaneously suggests Honda is preparing to formally step back from its "EV-first" commitments and reset around hybrids with selective electrification.

From Japan to the World: How's Your Auto Market Changing?

Honda's Korea exit is symbolic of a broader shift: Japan's auto industry is pivoting from "global expansion" to "focus and concentrate." China, Korea, North American EVs, the Sony partnership, dreams are being folded away one by one, even as Honda bets what's left on Japan, the US, India, and ASEAN. Is this retreat, or rational restructuring? The answer will likely come into focus after the May 2026 strategy announcement.

In your country, how do domestic and foreign car brands stack up? Have you experienced a major foreign brand withdrawing from, or entering, your market? We'd love to hear your perspective in the comments.

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