Honda tells suppliers to cut costs in US$9bil 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.
TOKYO: Honda has announced plans to slash over US$9 billion in costs over the next four years, instructing its suppliers to reduce prices significantly. This move comes as Chinese electric vehicle manufacturers like BYD gain market share in Southeast Asia, Latin America, and Europe, offering competitive prices driven by advanced technology.
Honda, facing its first annual loss as a publicly traded company, now prioritizes petrol-electric hybrids. The company aims to save 1.5 trillion yen (US$9.4 billion) by 2030. In a spring meeting, Honda briefed suppliers on the cost-cutting plan, targeting a 30% reduction in pressed and forged components, electrical parts, and software-defined vehicle (SDV) components.
Suppliers were also encouraged to source more from Chinese suppliers and utilize standardized parts. Honda faces intense competition from Chinese EVs, higher labor costs, US tariffs, and the need for continuous technological advancements.
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