Honda has instructed suppliers to cut costs as part of a plan to save 1.5 trillion yen ($9.4 billion) by 2030, according to Reuters, which reviewed internal company documents and interviewed two people familiar with the matter.
According to Reuters, Honda has set a goal of achieving 30% cost savings across three specific categories of parts: pressed and forged components, electrical parts, and components tied to software-defined vehicles. Suppliers were additionally urged to increase their reliance on components manufactured in China and to shift more of their procurement toward second- and third-tier vendors supplying standardized parts.
The scale of the effort reflects pressure from Chinese electric vehicle makers. BYD and rival Chinese EV makers have eroded competitors' footholds in Southeast Asia, Latin America, and Europe, leveraging sophisticated software, battery technology, and industry-low pricing to do so. One of the people familiar with the matter said that the situation appeared to leave "no room for delay." A second source said the cost-reduction targets were "extremely large" and that it was not clear whether they would be achievable.
Earlier this year, the outlet reported, Honda managers gathered with key suppliers at a Utsunomiya convention center, north of Tokyo, to lay out the plan. Each supplier was later given company-specific targets. Honda also told suppliers it would look to source more components from Chinese manufacturers.
In a written response to the outlet, a Honda spokesperson declined to comment on specific targets or details of supplier discussions, saying the company was working with suppliers globally to improve competitiveness and reduce costs through the use of standardized parts.
Honda stock fell 2.5% in afternoon trading on Wednesday. Shares of several Honda-affiliated suppliers also declined, with seat maker TS Tech stock down 1.3%, frame maker H-One stock off 2.3%, and auto body parts maker G-Tekt stock 2.0% lower.
The cost push comes as Honda works through a broader strategic retreat. The company ended U.S. sales of the Prologue , its only American EV, citing weak demand and a shift toward hybrids. It expects EV-related losses to ultimately exceed $12 billion. Honda reported its first-ever annual loss as a publicly traded company in May.
Honda has also frozen construction of EV and battery plants in Canada on an indefinite basis, after growth in U.S. electric vehicle sales fell short of expectations and the Trump administration removed federal tax incentives for EV buyers. The company is now targeting a lineup of 15 new hybrid vehicles by March 2030.
Honda and Nissan announced on Monday a collaboration to co-develop electronic control units for software-defined vehicles, targeting a common architecture built on those units starting in the 2029 financial year.
