On the Dash:
- Honda targets 1.5 trillion yen ($9.4 billion) in savings by 2030, Reuters reports.
- Suppliers were told to cut costs 30% in pressed, electrical and SDV parts.
- Shares fell 2.5% and affiliated suppliers also traded lower on the news
Honda is planning to cut more than $9 billion in costs by 2030 and has told its suppliers to slash their prices, according to internal documents reviewed by Reuters. The target is 1.5 trillion yen, or about $9.4 billion, over the next four years.
The push demonstrates the effort of Japanese automakers to respond to China. Meanwhile, BYD and other Chinese EV brands are gaining market share in Southeast Asia, Latin America, and Europe through superior software, improved batteries, and significantly lower prices.
Honda hopes to recover from first annual loss
Honda is working to repair its car business after a rough year, with EV losses expected to exceed $12 billion and a first annual loss as a public company posted in May. It has since shifted its focus to gasoline-electric hybrids.
Although a company spokesperson declined to comment on specific targets or supplier talks, the automaker is working with suppliers worldwide to reduce costs, including by using more standardized parts, the spokesperson told Reuters.
Suppliers asked to lower prices this spring
Managers met with major suppliers this spring near the company’s research center north of Tokyo, the documents showed. Each supplier later received its own cost-cutting target.
The automaker wants prices down 30% in three areas. Those are pressed and forged parts, electrical parts and parts used in software-defined vehicles, the documents showed. Cuts that deep would help Japanese suppliers compete with China, the documents said.
The company also asked suppliers to buy more standardized parts from smaller vendors and to use more Chinese-made components where possible. Honda said it would buy more from Chinese suppliers as well, one of the people said.
Honda shares take a hit
The targets are extremely large, and it is not clear whether suppliers can meet them, one source told Reuters. Honda Shares fell 2.5% on Wednesday, and several affiliated suppliers also traded lower.
The plan follows Monday’s news that Honda and Nissan will jointly develop electronic control units for software-defined vehicles. Both plan to use the shared system starting in fiscal 2029.
