Honda Asks Suppliers to Cut Prices by 30% on Certain Components

Honda has reportedly asked its suppliers to make significant cuts to the cost of components, with some key parts targeted for price reductions of as much as 30%. The effort reportedly includes components used in software-defined vehicles, a growing segment of the auto industry in which software controls an increasing share of a vehicle’s functions.

Yicai contacted Honda’s China operation for comment. A Honda representative said the company had not made an official announcement regarding the reported cost-cutting request. However, the representative said Honda routinely works with suppliers to optimize costs and improve competitiveness across its global research, development, manufacturing and purchasing operations.

Honda Targets $10 Billion in Savings by 2030

More details about the scale of Honda’s cost-cutting plans were reported by Reuters earlier on September 2. According to those reports, Honda Motor aims to save ¥1.5 trillion, or roughly $10 billion, over the next four years, through fiscal 2030.

The automaker is targeting cost reductions of about 30% across three major areas:

• Stamped and forged components
• Electronic components
• Components related to software-defined vehicles

The savings could give Honda additional resources to invest in vehicle electrification and digital technologies. Those investments are becoming increasingly important as automakers balance the cost of developing next-generation vehicles with the need to remain competitive in a rapidly changing industry.

Honda is also pursuing joint development projects with other automakers as part of its broader effort to reduce costs and accelerate new technology.

On September 1, Honda and Nissan announced plans to jointly develop a standardized electronic control unit specifically for software-defined vehicles. A common system could eventually make vehicle electronics less expensive and easier to develop, while also reducing complexity for future models.

The two companies have already outlined a rough timeline for the project. Beginning in fiscal 2029, Honda and Nissan plan to introduce an automotive electronic architecture built around the jointly developed control unit.

The companies expect the partnership to reduce development costs while helping them bring new technologies to production vehicles more quickly.