Honda plans to cut more than $9 billion in costs over the next four years, primarily by instructing suppliers to reduce their prices significantly. This initiative comes as Honda grapples with fierce competition from Chinese electric vehicle makers like BYD, which are gaining market share in various regions due to their advanced technology and lower prices.
Honda, which reported its first annual loss as a publicly traded company, anticipates EV-related losses exceeding $12 billion, prompting a shift in focus towards gasoline-electric hybrids.
The automaker aims to save 1.5 trillion yen ($9.4 billion) by 2030 and has set ambitious cost-reduction targets for its suppliers, particularly in key components such as pressed and forged parts, electrical components, and software-defined vehicle parts. Honda's strategy includes sourcing more components from Chinese suppliers and utilizing standardized parts to enhance competitiveness.
The scale of the cost-cutting targets is described as 'extremely large,' raising questions about their achievability. Additionally, Honda's CEO, Toshihiro Mibe, has faced pressure regarding the company's performance, especially after the termination of merger talks with Nissan.
The broader automotive industry is also contending with rising labor costs and the need for substantial investments in technology development