Honda tells suppliers to cut costs in $9 billion push to fend off China, documents show

Honda plans to cut more than $9 billion in costs within four years and has told suppliers to sharply lower their prices, Business Recorder reported, citing internal documents and a single informed source. According to that account, the carmaker targets savings of 1.5 trillion yen, equal to $9.4 billion, by 2030. The effort is one of the clearest signs yet of how Japanese automakers are responding to rising pressure from Chinese rivals.

The push comes as BYD and other Chinese electric vehicle makers gain ground in Europe, Latin America and Southeast Asia, helped by software, battery technology and the lowest prices in the industry. Honda, which also leads the world in motorcycles, projects that its losses tied to electric vehicles will exceed $12 billion in total, and is turning toward gasoline-electric hybrids. In May, the company also recorded its first annual loss since becoming publicly traded.

According to the documents, Honda managers met major suppliers this spring at a convention centre in Utsunomiya, then issued company-specific cost reduction goals to each one. The company is seeking 30% savings across three areas: stamped and forged pieces, electrical components and SDV-related parts. Suppliers were also pushed to use standardised parts from lower tiers and more Chinese-made components. On Wednesday, Honda shares slipped 2.5% during afternoon trade, while affiliated suppliers TS Tech, H-One and G-Tekt also declined.