Honda wants to shift production from China to Vietnam in order to take advantage of cheap labor costs and preferential investment policies in the country, the Vietnam News Agency reported Thursday.
The Japanese automobile company is facing difficulties in China due to ongoing strikes at its factories and other component suppliers, the report said.
Besides, a stronger yuan against the US dollar also makes Honda's business in China less profitable.
Honda is aiming to increase its component supplies by 24 percent after its production in China was affected by labor strikes.
According to the news agency, Vietnam and India are emerging target destinations for both foreign and domestic investors from China.
Honda opened its first car plant in Vietnam in 2005. The US$60 million factory in the northern province of Vinh Phuc has an output of 10,000 units per year.