Japan's Honda Motor Co. is aiming to cut more than $9 billion in costs over the next four years and has instructed suppliers to sharply reduce their prices, according to internal company documents reviewed by Reuters and people familiar with the matter.
According to the report, Honda aims to save 1.5 trillion yen, or roughly $9.4 billion, by 2030. The push comes as the company seeks to reduce costs across key components while Chinese electric-vehicle makers, including BYD, gain market share in Southeast Asia, Latin America and Europe.
Honda is targeting a 30% cost reduction in three key parts categories: pressed and forged components, electrical parts, and parts related to software-defined vehicles. Such a reduction would allow Japanese suppliers to better compete with Chinese rivals, according to the documents.
Honda's direct, or "tier-one," suppliers have also been asked to review how they procure materials and were urged to make greater use of standardised parts sourced from second- and third-tier suppliers to help hold down costs. Honda managers additionally asked suppliers to expand their own use of Chinese-made components where possible, the documents showed.
Honda managers met with major suppliers this spring and subsequently gave individual suppliers specific cost-reduction targets, according to the report.
In a written response to Reuters, a Honda spokesperson declined to comment on specific cost-reduction targets or details of discussions with suppliers, saying the automaker was working with suppliers globally to improve competitiveness and reduce costs, including through the use of standardised parts.
The cost-cutting drive follows a period of financial pressure on Honda; the automaker had already been working to offset the impact of U.S. tariffs and other supply-chain risks in recent earnings periods.