Honda is recalibrating its vehicle development strategy to be more competitive while warning of the growing threat posed by Chinese manufacturers and their production processes.
First things first: Under the move, thousands of Honda engineers involved in development will become employees of a research and development (R&D) unit aimed at reviving the company’s spirit of innovation, Nikkei Asia reported.
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The move revives a structure abandoned in 1960, when Honda R&D was separated from Honda Motor, reflecting founder Soichiro Honda’s belief that independence fuels engineers’ creativity.
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That philosophy led to the 1972 CVCC engine, used in the Civic, which helped establish Honda’s automotive business.
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Former Honda Motor President Takahiro Hachigo reintegrated operations in 2020, a move supported by current Honda President Toshihiro Mibe, then head of development, despite some internal opposition.
What they’re saying: “Five or six years ago, it was fine to have headquarters taking the lead. But now the world has changed drastically,” said a Honda executive, with the company’s automotive segment reporting a 73 billion yen ($468 million U.S.) operating loss for the April-September 2025 period, compared with a 258 billion yen ($1.6 billion U.S.) profit a year earlier, per Nikkei Asia.
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Why it matters: Honda’s move signals how quickly the competitive landscape is shifting, as automakers look for ways to improve their product, sales, and profitability amid mounting industry headwinds and tighter competition.
Between the lines: Mounting pressure from Chinese automakers is the biggest factor behind Honda’s decision to give its R&D unit more independence, as Mibe detailed after visiting an auto supplier factory in Shanghai in late February.
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Everything at the facility, from parts procurement to logistics management, was automated, with no humans on the production floor.
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The factory, operated by a major Chinese parts manufacturer, also supplies Tesla in the U.S., with a focus on keeping production costs low.
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Chinese automakers can develop a new model in about 18 to 24 months, roughly half the time it takes most other automakers.
What they’re saying: “We have no chance against this,” Mibe said during his visit to the Shanghai factory.
Bottom line: Honda’s restructuring is a reminder that dealers are operating in a market where the speed, cost efficiency, and products manufactured by Chinese automakers are setting industry precedents and reshaping the way brands show up to market.
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