Honda is having a serious look at its budget. The automaker met with suppliers and instructed them to dramatically reduce their prices, sources familiar with the matter and internal documents show, according to areport by Reuters.
Honda reportedly met with its major suppliers in the spring of 2026, where it relayed plans to lower production costs—at the suppliers’ expense. According to the report, Honda gave each supplier company-specific targets to cut part costs. The automaker is looking to save 1.5 trillion yen ($9.4 billion) by 2030, according to the documents and one Reuters source.
Along with securing lower prices from its suppliers, Honda is looking to increase parts standardization as a cost-saving measure. The automaker will also look to source more components from Chinese suppliers, one source told Reuters.
Price-saving will be focused on three core categories, including pressed and forged components, electrical parts, and parts related to software-defined vehicles. According to the report, Honda’s direct suppliers were even urged to review how they source materials, while being tasked with increasing their use of standardized parts sourced from second- and third-tier suppliers. The targets are apparently so severe that it is not immediately clear if the suppliers will achieve them, a source said.
The messaging comes as Honda reels from its first-ever annual loss as a publicly traded company. Moving forward, Honda expects its EV business losses to climb to more than $12 billion, Reuters reported. While some of those losses are tied to tariff costs and canceled models in North America, a large percentage is also related to increased competition from Chinese automakers who can undercut Honda on price. So, the urgent directive to its suppliers aims to bring Honda’s own production costs more in line with the more vertically integrated Chinese brands.