engineers at Honda will soon lead the company’s research and development instead of following management’s orders.
According to the business news agency Nikkei Asia, Honda will spin off its research and development department to boost innovation within the Japanese car group.
The research and development unit was originally founded in 1960 as a separate division of Honda, based on the belief that creativity and innovation could best be fostered in an independent environment – an idea championed by founder Soichiro Honda.
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However, due to financial constraints, the subsidiary was reintegrated into Honda in 2020.
“Five or six years ago it was fine for headquarters to take charge. But now the world has changed drastically,” said a Honda executive Nikkei.
The decision to re-establish Honda R&D as a separate business unit is said to be a direct response to the significant competition emanating from the Chinese automotive industry.
Combined with innovations in production and lower manufacturing costs, Chinese automakers can develop a new model in less than two years – about half the time of Japanese automakers.
“Even if we restore the research institute, there is no guarantee that we can beat China,” the Honda executive admitted, but reiterated that the company does not plan 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 last year the number slumped to 640,000 units, despite a range of China-tailored products, including electric vehicles (EVs). Nikkei According to reports, Honda’s production capacity in China is around 1.2 million units, but factory utilization is around 50 to 60 percent.
Last month, Honda announced it was abandoning plans to produce electric cars with Sony under the Afeela brand, four years after announcing the joint venture. This came just days after Honda confirmed it would be phasing out a number of its future electric models just before they were due to go into production.
Honda also previously announced plans to develop electric vehicles and hydrogen fuel cell technology with General Motors, before later abandoning those plans and announcing a similar partnership with Mitsubishi for affordable battery-powered cars.
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