Engineers at Honda will soon spearhead the company’s research and development, rather than following directions from company management.
According to business news outlet Nikkei Asia, Honda will spin off its R&D department in an effort to reignite innovation from within the Japanese car company.
The R&D unit was originally created as a separate arm from Honda in 1960, from the belief that creativity and innovation are best cultivated in an independent environment – an idea championed by founder Soichiro Honda.
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However, the subsidiary was then absorbed back into Honda in 2020 due to financial constraints.
“Five or six years ago, it was fine to have headquarters taking the lead. But now the world has changed drastically,” a Honda executive told Nikkei.
The decision to reinstate Honda R&D as its own business unit is said to be a direct response to the significant competition emerging from China’s automotive industry.
Along with innovations in production and lower manufacturing costs, Chinese car companies can develop a new model in less than two years – approximately half the time it takes for Japanese automakers.
“Even if we restore the research institute, there is no guarantee that we can beat China,” the Honda executive conceded, but reiterated the company wasn’t about to “raise the white flag”.
Honda’s position in the Chinese market has been eroded in recent years. At its peak in 2020, Honda sold around 1.6 million vehicles there, but this slumped to 640,000 units last year despite a raft of products tailored to China, including electric vehicles (EVs). Nikkei reports Honda’s production capacity in China is around 1.2 million units, but its factory utilisation rates sit at around 50-60 per cent.
Last month, Honda announced it was abandoning plans to produce electric cars with Sony under the Afeela brand – four years after the joint venture was announced. It came just days after Honda confirmed it was axing a range of its own future electric models, shortly before they were due to enter production.
Honda has also previously announced plans to develop electric vehicles and hydrogen fuel-cell technology with General Motors, before later ditching those plans and announcing a similar partnership with Mitsubishi on affordable battery-powered cars.
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