Honda has identified the need to reassess its Asia business operations, where competition in cars and SUVs has been intensifying.

"In particular, in China and India, it is essential to rebuild how we work with local suppliers and how we structure local manufacturing in order to regain competitiveness in both speed and cost," stated senior management during an analyst Q&A session in Japan following the company's third-quarter results for the period ending December 31st, 2025.

This statement responded to a question regarding whether Honda was losing competitiveness in Asia, where its automobile business faced significant challenges.

The management highlighted structural issues, noting: "We recognise that we do not currently have a cost advantage versus competitors. We need to learn from what is being done in China and incorporate it into our operations."

In India, Honda continues to be perceived as a marginal player in the car segment, in contrast to its position in two-wheelers, where it ranks second, with former ally Hero MotoCorp leading the segment.

According to senior management, Honda's motorcycle business in China already operates closely with local suppliers in manufacturing. In contrast, elements of a self-reliance approach remain in the automobile business.

Need to change mindset

The management indicated plans to reassess this approach and, where necessary, shift away from complete internal control towards producing vehicles that are easier to manufacture. This would involve a change in approach.

Honda's automobile business in Asia has declined, with market share captured by emerging OEMs. Compared with competitors that operate with greater cost efficiency, Honda acknowledges that it lacks a comparable level of cost competitiveness.

Management stated: "We need to leverage upcoming opportunities, such as full model changes, to improve performance."

Regarding the strategic shift, Honda admitted that insufficient resources had been allocated to the Asian market. Prioritising the company-wide transition to electric vehicles (EVs) resulted in certain legacy areas being inadequately maintained, leading to products that were not fully accepted by the market.

As part of a reform measure, Honda is proceeding to reduce development lead times by half, and this process has already commenced. "Responding to change in an agile manner and bringing products to market in a timely way is essential to sustaining competitiveness. Reforming development speed is therefore central to the transformation," explained management.

Shift in EV transition outlook

While addressing challenges in its global automobile business, Honda had anticipated the shift from internal combustion engine (ICE) vehicles to EVs to accelerate around 2025; however, conditions have changed. Major ICE models, including the Honda Civic, Honda CR-V and Honda Accord, had become dated around 2021, resulting in reduced profitability.

These models have since been updated, contributing to improved profitability. Management noted that a degree of visibility on ICE earnings had been established.

Since 2024, market conditions have shifted. In North America, tariffs have had a significant impact, and management indicated that, without tariffs, the EV transition might have progressed in line with earlier plans. Cost competitiveness has become increasingly important.

"In China, development speed has accelerated to the point where models can be updated within approximately one year, making it challenging to keep pace with technological changes," management acknowledged.

Globally, the EV market has slowed. Previously, in pursuit of carbon neutrality by 2050, Honda had prioritised its EV strategy. The company is now reassessing its approach.

Revising the EV roadmap

"While the ultimate goal remains unchanged, the pathway to achieving it is evolving differently from prior plans. Considering regional market conditions, the timing of EV introductions will be reassessed, and previously planned initiatives revised to align with current conditions," stated management.

In North America, EV penetration is not expected to expand significantly in the near term. Accordingly, resources will be concentrated on ICE and hybrid electric vehicle (HEV) models to maintain competitiveness.

In China, despite high EV penetration, Honda acknowledges that it lags local manufacturers in areas such as software and interior technologies. Leveraging local suppliers will be necessary, and the company intends to move away from a self-reliant approach towards one more aligned with the Chinese market.

Management indicated that operations are being adjusted in response to cost competitiveness challenges. The experience gained in China may be applied across other Asian markets. Competition from emerging manufacturers continues to intensify in Asia.

India remains a challenging market

Honda's ability to achieve its objectives in Asia remains uncertain. India will continue to form part of the growth strategy, but the company has remained on the side-lines in a market where the Toyota Motor Corporation-Suzuki Motor Corporation alliance, Hyundai Motor Company-Kia Corporation, and local competitors such as Mahindra & Mahindra and Tata Motors are strengthening their positions with ICE and EV offerings.

Despite operating in India for three decades, Honda has not established a leading position, despite models such as the Honda City and more recent offerings including the Honda Amaze and Honda Elevate. The company ceased vehicle production at its Greater Noida facility near Delhi and transferred operations to a facility in Rajasthan.

This move formed part of a restructuring effort to control costs and establish a sustainable business model for India. The strategy has resulted in a mix of domestic sales and exports; however, overall volumes remain limited.

In the two-wheeler segment, Honda competes with Hero MotoCorp. In electric two-wheelers, TVS Motor Company and Bajaj Auto hold leading positions, followed by Ather Energy and Hero.