Key facts
- Honda is reorganizing its R&D division to accelerate innovation and vehicle development.
- The company aims to counter the rapid development and production capabilities of Chinese automakers.
- Honda's automotive segment reported a significant operating loss for the April-September 2025 period.
- The restructuring involves making engineers employees of a separate R&D unit, a model previously used in 1960.
- Chinese automakers can develop new models in 18-24 months, significantly faster than competitors.
Honda is undertaking a significant restructuring of its research and development operations, aiming to regain its innovative edge and speed up vehicle development in the face of intense competition from Chinese automakers. The company reported a substantial operating loss of 73 billion yen ($468 million) for its automotive segment in the April-September 2025 period, a stark contrast to the 258 billion yen ($1.6 billion) profit recorded a year prior.
This strategic shift involves making thousands of Honda engineers employees of a newly independent R&D unit, a model that mirrors the company's structure from 1960. Honda's leadership believes this independence is crucial for fostering creativity and innovation, drawing inspiration from founder Soichiro Honda's philosophy. The move is a direct response to the rapid pace at which Chinese manufacturers are developing new models, often in as little as 18 to 24 months, and their highly automated, cost-efficient production processes.
Honda President Toshihiro Mibe acknowledged the challenge, stating, "We have no chance against this," after observing an automated parts supplier factory in Shanghai. The company's decision signals a broader industry trend where speed, cost efficiency, and product innovation from Chinese automakers are setting new benchmarks.