IT News on October 6th: According to Reuters today, two sources familiar with the matter revealed that pressure from competitors has forced Japanese automaker Honda to re-evaluate its long-held strategy of developing independently. Honda is collaborating with Tata Technologies in India with the aim of reducing costs by up to one-fifth and halving the development cycle for complete vehicles.
Under the impact of expected losses related to electric vehicles exceeding $12 billion (Note from IT: the current exchange rate is approximately 80.574 billion RMB), Honda is currently making a full shift to hybrid electric technology and vigorously cutting expenses. The company is seeking to reduce costs by over $9 billion over the next four years.
In May this year, engineering service provider Tata Technologies announced that it had been selected to provide vehicle model development services for a Japanese automaker, but the identity of the partner was not revealed at that time. According to the two aforementioned individuals with knowledge of the matter and another related person, the automaker in question is Honda.
Two people familiar with the matter said that according to this vehicle outsourcing agreement, Tata Technologies will develop passenger cars specifically for the Indian market. Through this cooperation, Honda expects to reduce costs by up to 20% and cut the current vehicle development cycle, which lasts about five years, in half.
Two informed sources revealed that the reason Honda decided to adopt Tata's technology stemmed from a disagreement between its management in Japan and India, as the two parties could never reach an agreement on the strategy for selecting suppliers of parts for future new car models in India.
Honda stated in an official statement that the company had previously failed to establish a product lineup in India that was substantial enough to make consumers feel that they were getting value for their money. As a result, Honda is now working on "readjusting" its product line planning in India and plans to launch new models that balance quality with price competitiveness.
At the same time, Honda denied any disputes between the teams in Japan and India regarding the selection of suppliers.
In another separate statement, Honda's Indian subsidiary stated that product development involves close collaboration between different teams, and added that it is inaccurate to characterize the collaborative discussions as disagreements.
Tata Technologies has not responded to the request for comment.
