Honda Admits Difficulty Competing with China, Changes Product Development Strategy

JAKARTA – Honda Motor Co. is once again changing its strategy for product development. The Japanese manufacturer has decided to restore its research and development (R&D) division to greater independence, after it had previously been centralised.

This move simultaneously reverses the policy adopted in 2020. At that time, Honda consolidated all development processes to make them more efficient and faster.

However, a separated R&D model is not new for Honda. Since 1960, the company has given its engineers freedom to experiment with minimal interference.

This approach proved successful. One example is the birth of the CVCC engine, which was more emissions-friendly in the 1970s, as well as the success of the Honda Civic in the US market.

The greatest pressure comes from Chinese automakers such as BYD and Geely. These two brands are considered capable of developing new cars much faster.

While Japanese manufacturers require years, Chinese producers can launch new models in just around 18 months.

Honda CEO Toshihiro Mibe even admitted the challenge.

“We have no chance against this,” he said, quoted from Carscoops, on Monday (6/4/2026).

This situation is also evident from Honda’s continuously declining sales in China. In 2025, sales even fell by up to 24 per cent. Additionally, several factories are not yet operating at full capacity, and plans for launching new models are being scaled back.

In contrast to Honda, other Japanese manufacturers are choosing to collaborate with local companies in China. Toyota Motor Corporation and Nissan Motor Corporation, for instance, are partnering with local partners to accelerate the development of more affordable electric vehicles.

Honda, however, is opting to improve from within. In addition, the company is beginning to look at India as a production base for the next generation of electric vehicles.

With lower production costs and a continuously growing industry, India is expected to help Honda catch up on its lag. Nevertheless, challenges remain, particularly in matching the speed of Chinese automakers.