Honda tells suppliers to cut costs in $9 billion push to fend off China
TOKYO — Japan's Honda aims to cut more than US$9 ‌billion in costs over the next four years and has instructed suppliers to drastically reduce their prices, according to internal documents and one person familiar with the matter.
Japanese automaker Honda is instructing its suppliers to cut costs by 30% over the next four years in an effort to combat the growing competition from Chinese electric vehicle manufacturers, according to internal documents and sources. The plan, reported for the first time, is a significant response to the increasing market share of Chinese EV makers like BYD, which are offering lower prices due to advanced software and battery technology.
Honda, the world's largest motorcycle manufacturer, is also focusing on gasoline-electric hybrids to offset its expected $12 billion EV-related losses. The company aims to save ¥1.5 trillion ($9.4 billion) by 2030 through cost reductions in pressed and forged components, electrical parts, and software-defined vehicle (SDV) parts.
Suppliers were briefed on the plan in a meeting at a convention center in Utsunomiya, north of Tokyo. Honda is also encouraging suppliers to source more components from Chinese manufacturers.
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