Japan’s Honda Motor Co. announced an aggressive cost‑reduction program that aims to save roughly 1.5 trillion yen (about $9.4 billion) by 2030. The automaker has instructed its tier‑one suppliers to dramatically lower prices, adopt standardized components and, where feasible, source more parts from Chinese manufacturers.
Why the push?
Honda’s car division has been hit hard by the rapid rise of Chinese electric‑vehicle (EV) makers such as BYD, which are gaining market share in Southeast Asia, Latin America and Europe with low‑priced, software‑rich models. Honda reported its first annual loss as a publicly traded company in May and expects EV‑related losses to exceed $12 billion.
Supplier meeting in Utsunomiya
In the spring, Honda executives gathered with major suppliers at a convention centre in Utsunomiya, north of Tokyo, to lay out the new plan. Each supplier received company‑specific targets to cut costs, with a focus on three key categories: pressed and forged components, electrical parts and parts for software‑defined vehicles (SDVs). The company also urged suppliers to review material procurement and to rely more on standardized parts from second‑ and third‑tier vendors.
Ambitious targets
The documents indicate Honda is seeking a 30% cost reduction in the three targeted parts categories. While the goals are described as “extremely large,” the company believes the measures will help Japanese suppliers stay competitive against Chinese rivals.
Collaboration with Nissan
Honda and Nissan have agreed to jointly develop standardized electronic control units for SDVs, with a rollout planned for the 2029 fiscal year. This partnership reflects a broader industry trend toward shared platforms to contain costs.
Broader pressures
In addition to Chinese competition, Honda and other automakers face higher U.S. import tariffs imposed by President Donald Trump and rising labor expenses. The need to invest heavily in research and development for advanced vehicle technology further squeezes margins across the sector.
Honda CEO Toshihiro Mibe recently secured reappointment to the board despite pressure from former executives to step down over the company’s performance. The automaker’s cost‑cutting drive underscores the urgency of adapting to a rapidly changing global auto market.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
