Honda partners with Tata Technologies to cut costs, development time
What's the story
Honda Motor is teaming up with Tata Technologies to rethink its strategy in India, Reuters reported. The partnership aims at cutting costs by as much as 20% and halving development times. This comes as a response to the electric vehicle (EV)-related losses that Honda expects to exceed $12 billion. Last month, it was reported that the company is looking to save over $9 billion in costs over four years and has asked suppliers for major price cuts.
Outsourcing agreement
Disagreement over supplier selection led to the outsourcing decision
Tata Technologies, a spin-off of Indian automaker Tata Motors, has been chosen to design cars for the Indian market under an outsourcing agreement.
The decision was taken after a disagreement between Honda's Japanese and Indian managers over supplier selection for upcoming vehicles in India.
The partnership was finalized after two years of discussions and is expected to speed up development times from around five years at present.
Market challenges
Honda's market share has dwindled in India
Honda's market share in India has plummeted from a high of 7.3% to just 1.3%.
The company now has a portfolio of only four models and is losing out to affordable, feature-packed competitors like Tata Motors and Mahindra.
Despite these challenges, Honda President Toshihiro Mibe remains optimistic about rebuilding the business on an entirely different footing.
New launches
Small SUV will be 1st vehicle developed under new strategy
The first vehicle being developed with Tata Technologies will be a small SUV, less than 4 meters long. This segment accounts for a large chunk of India's car market where Honda has limited presence.
The launch is slated for 2028. A mid-size SUV will follow, with plans to revive its strength in sedans later on.