Honda Motor Co. is planning to implement cost reductions totaling more than $9 billion (1.4 trillion yen) by the end of fiscal year 2028 and has asked its parts suppliers to lower their prices, according to internal company documents and an individual with knowledge of the strategy. The initiative is aimed at improving the automaker’s cost-competitiveness as the global automotive industry shifts toward electric vehicles (EVs).
The cost-saving measures were detailed in materials shared internally and with the company’s network of suppliers. According to the source, who was not authorized to speak publicly on the matter, the plan calls for a comprehensive review of expenditures across the company’s operations. A key component of this strategy involves requesting price cuts from external parts manufacturers that form Honda’s supply chain.
This directive comes as established automakers worldwide face increased competition from newer companies, particularly from China, that have focused on EV production. Companies like BYD have gained significant market share through competitive pricing and rapid technological development, placing pressure on traditional manufacturers to streamline operations and reduce the production costs of both internal combustion engine and electric vehicles.
The internal documents reportedly outline a multi-year strategy to enhance efficiency and free up capital for investment in research and development for next-generation vehicles, including EVs and related software. The specific targets for price reductions from individual suppliers were not publicly disclosed.
Requests for price concessions from large automakers are a common practice in the industry, though they can affect the profit margins of parts suppliers. The success of such cost-cutting programs often depends on collaborative efforts to find efficiencies in manufacturing and logistics.
Honda has not issued an official public statement confirming the details outlined in the internal documents. The company has previously stated its long-term goals of achieving carbon neutrality and transitioning its vehicle lineup to 100% electric and fuel cell vehicles by 2040. Such a transition requires substantial investment in new technologies, battery production, and vehicle platforms.
