For the first time in 78 years, losses “forced” historic outsourcing, Honda (HMC.US) teamed up with Tata Technology to reduce costs and increase efficiency

The Zhitong Finance App learned that according to people familiar with the matter, Honda Motor (HMC.US) has outsourced a new car line development project to Tata Technologies Ltd. (Tata Technologies Ltd.) This is the first time that a Japanese car company has commissioned an Indian engineering service company to build an end-to-end platform with the aim of drastically reducing costs. An anonymous source said that the platform is expected to support multiple models and is compatible with traditional fuel powertrains and electrification solutions such as hybrid and pure electric power. They did not specify which markets these vehicles, designed by Tata Engineering, will be sold.

Outsourcing the key function of core model platform development marks a major shift for Honda — the company has historically kept core platform development mainly in-house or within an established supplier system. The move comes at a time when Honda is fully adjusting its product roadmap. Previously, the company recorded its first annual net loss since its establishment in 1948, shelved several electric vehicle plans, and accelerated cost reduction measures.

A Honda spokesperson said in an email that “the company is always evaluating the possibility of various types of external cooperation to enhance competitiveness,” but declined to comment on market rumors or specific cooperation details. A Tata Technology spokesperson did not immediately respond to a request for comment.

In the Indian market, speed is also critical for Honda. The company's current product portfolio is old and thin, and Honda lags behind competitors such as Maruti Suzuki India (Maruti Suzuki India) and Toyota Motor in key markets that have been established to be tied with Japan and North America.

Although Honda does not currently sell pure electric models in India, local giants Tata Motors (Tata Motors) and Mahindra (Mahindra & Mahindra) have launched a variety of models to seize the opportunity. Honda's share in India, the world's third-largest automobile market, has shrunk from a peak of 7% more than a decade ago to less than 2%.

Honda has previously used partners such as GM to develop some models, such as the recently discontinued Prologue and Acura ZDX. However, this is the first time that an Indian engineering service company has been commissioned to build a new vehicle platform.

India's role is becoming more prominent

The partnership also highlights India's continuing rise as a global automotive engineering center — from Mercedes-Benz to BMW, and now to Honda, more and more foreign car companies are outsourcing vehicle development work to shorten the R&D cycle and reduce costs.

Tata Technology CEO Warren Harris (Warren Harris) told analysts in July this year that the company was advancing “a comprehensive vehicle development project with a leading Japanese automaker,” but did not name Honda.

Tata Technology is part of the Tata Group and provides engineering and digital services to automotive, aerospace and industrial customers. This partnership with Honda has opened up a customer base that has traditionally been difficult to penetrate, and marks a major breakthrough.

For Honda, this decision reflects its deep reflection on future model development models. The company's president, Toshihiro Mibe, said in May this year that it will “make more flexible and strategic use of external resources,” and mentioned that in the process of adapting to an increasingly uncertain global market, the cost competitiveness and speed of R&D brought by Indian and Chinese engineering talents can be used.

Honda has announced that it will launch a new car series in India starting in 2028, while expanding India's role as a manufacturing and export hub for the Latin American and Southeast Asian markets.