Honda Motor
aims to cut costs by as much as a fifth and halve development
times under its new partnership in India with Tata Technologies
, according to two people familiar with the matter, as
pressure from rivals forces the Japanese automaker to rethink
its go-it-alone approach.
Reeling from electric vehicle (EV)-related losses that it
expects to reach more than $12 billion, Honda is pivoting to
gasoline-electric hybrids and slashing expenses. Last month,
Reuters reported that it is seeking to cut more than $9 billion
in costs over the next four years and has told suppliers to
drastically reduce prices.
In May, engineering firm Tata Technologies said it was
selected to develop vehicles for a Japanese automaker. It
declined to name the partner, but the two people and another
person familiar with the matter said it was Honda.
Under the outsourcing agreement, Tata Technologies will
develop cars for the Indian market, while Honda expects to see
up to 20% in cost reductions and halve its development times
from around five years at present, two people said.
Honda decided to bring in Tata Technologies after the
automaker’s Japanese and Indian managers failed to agree on
which suppliers to use for upcoming vehicles in India, two of
the people said.
All three sources declined to be identified because the
information has not been made public. The cost-cutting and
development targets in India, as well as the internal deadlock
over supplier strategy, are being reported for the first time.
In a statement, Honda said it has not been able to offer a
sufficient product line-up in India that allows customers “value
for money.” To that end, it was “redefining” its offerings in
India and planned to introduce vehicles that strike a balance
between quality and price, it said.
It denied there were disagreements between the Japanese and
Indian teams over supplier selection.
In a separate statement, Honda India said product
development involved close collaboration between different
teams, adding that it was inaccurate to characterise
collaborative discussions as disagreements.
Tata Technologies did not respond to a request for comment.
Japanese managers wanted to retain established suppliers to
ensure quality and consistency, while Honda’s team in India
pushed for greater use of local suppliers to lower costs and
speed up development in the world’s third-largest car market,
two of the people said.
Reuters could not determine how long the deadlock lasted but
the disagreement was enough to delay work on some products, the
two people said. The partnership had been under discussion for
about two years before being finalised, one of them added.
Tata Technologies, which was spun off from Indian automaker
Tata Motors, was chosen because of its access to a
broad network of local suppliers and because Honda managers
believed it could design vehicles in line with consumer tastes
and spending preferences, the person said.
Honda will oversee the process to ensure quality standards
are met and will retain control over areas like technology,
connectivity and driver-assistance systems, the person added.
Honda has long carried the imprint of its famously
independent late founder, Soichiro Honda. It developed two of
the world’s best-selling cars, the Civic and the Accord, along
with the most popular motorcycle of all time, the Super Cub.
Like other Japanese automakers, Honda faces the difficult
balancing act of defending its legacy business in places like
the US while developing new technologies to compete with Chinese
firms elsewhere. India, a fast-growing market that remains
closed to Chinese EV makers, has become more important.
But Honda’s market share there has slumped to 1.3% from a
peak of 7.3% more than a decade ago. Its portfolio has shrunk to
four models and it is losing to affordable, feature-packed
rivals like Tata Motors and Mahindra. It also has
little to offer in the biggest and fastest-growing SUV segment.
“Honda is already late and behind competitors,” one of the
people said.
Honda President Toshihiro Mibe is under pressure to turn
around the automaker, which recorded its first-ever annual loss
in the last financial year.
In May, Mibe said that while India was a “key focus” for
Honda, the automaker had not always been successful there.
“We need to rebuild the business on an entirely different
footing,” he said.
Previously, Honda adapted for India cars that were
originally designed for Japan or other global markets. That
resulted in it offering vehicles that were seen as
over-engineered and pricey.
The first vehicle under development with Tata Technologies
is a small SUV that is less than 4 metres (13.1 feet) in length,
a segment that accounts for a large portion of India’s car
market and where Honda has limited presence. It is targeted for
launch in 2028, two of the people said.
A second, mid-size SUV is expected to follow, with Honda
later trying to revive its strength in sedans, one of them
added.
In its statement, Honda said it planned to launch vehicles
in India in the sub-4-metre category and the larger midsize
category from 2028 onwards.
India is Honda’s only major emerging market and it wants to
make manufacturing and sourcing there more competitive.
If the first product under the deal is successful in terms
of quality, sales and profitability, it will open opportunities
for Honda to export from India, one of the people said.
Published on October 5, 2026
