Honda targets $99B cost cuts over 4 years, expands China-sourced parts

Honda Unveils Sweeping Cost-Cutting Plan Through 2030

Honda Motor is targeting savings of 1.5 trillion yen — approx. $9.9 billion — over the next four years, a Reuters report said on September 2. The Japanese automaker plans to cut costs by 30% in three critical areas: stamping and forging parts, electronic components, and software-defined vehicle parts.

Honda recently held meetings with key suppliers at its Utsunomiya facility, where it outlined the cost-reduction plan and assigned individual targets to each supplier based on their business scope, according to people familiar with the matter.

The automaker is also pressing Tier 1 suppliers to rethink their raw-material procurement strategies and increase their use of standardized parts sourced from Tier 2 and Tier 3 suppliers, further compressing costs across the supply chain.

Notably, Honda is expanding its reliance on Chinese-made components, directing suppliers to increase procurement of parts manufactured in China wherever feasible. The move is seen as a strategy to bolster competitiveness through lower-cost sourcing.

Pressure Mounts on Honda's Auto Business

While Honda remains the world's largest motorcycle manufacturer, its automobile division is under significant financial strain. The company has projected that cumulative losses related to its electric-vehicle transition will exceed $12 billion (approx. ¥1.8 trillion). In May, Honda reported its first net loss since listing on the Tokyo Stock Exchange in 1957, prompting CEO Toshihiro Mibe to apologize to shareholders — a gesture that earned investor support.

The company's struggles in China are particularly acute. Honda's auto sales in China fell 48.7% year on year to 28,279 units in May, a sharp decline that has also prompted Japanese parts maker F-TECH to announce layoffs of roughly half its Chinese workforce.

Nissan Partnership on Software-Defined Platforms

In a separate development announced on September 1, Honda and Nissan said they will jointly develop a standardized electronic control unit (ECU) for software-defined vehicles. The two automakers plan to launch vehicle electronic architectures built around the shared ECU starting in fiscal year 2029, marking a significant step toward consolidating development costs in the increasingly software-driven automotive landscape.

Despite the aggressive cost targets, insiders cautioned that the goals are "very large" and whether Honda can achieve them remains unclear.