- Honda revives independent R&D unit hoping to spark faster innovation again.
- Chinese automakers are developing cars twice as fast with cheaper production.
- A sales plunge in China is forcing Honda to rethink of strategy and global plans.
Honda Motor Company is dusting off an old idea and hoping it still has some magic left. The company that recently scrapped its planned US EVs, is spinning its engineers back into a semi-independent R&D arm, effectively undoing a major shake-up from just a few years ago.
If this sounds like corporate déjà vu, that’s because it is. Honda originally set up its R&D division as a separate entity in 1960, giving engineers room to experiment without corporate interference. That approach helped create breakthroughs like the early 1970s emissions-friendly CVCC engine, turned cars like the original Civic into a US hit and put Honda’s fledgling car division on the map.
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Fast forward to 2020 and that philosophy was scrapped in favor of efficiency. Development was centralized to speed things up and cut complexity. Now Honda is reversing course again and betting that creative freedom beats rigid structure, Nikkei Asia reports.
The reason, as you’ve probably already guessed, is China. Chinese automakers like BYD and Geely are moving at a pace Honda cannot match. While Japanese brands may take years to bring a new model to market, Chinese rivals are doing it in nearly half the time, as little as 18 months, with slick software and highly automated factories.
No Chance
Honda CEO Toshihiro Mibe didn’t mince words after visiting a Chinese supplier. “We have no chance against this,” Nikkei Asia reports him saying. That’s not the kind of quote you put on a motivational poster, but it does explain the urgency.
The numbers back up the concern. Honda’s sales in China have been sliding for years, and dropped 24 percent in 2025. Factories are running below optimal levels, and plans for new models have already been scaled back. Meanwhile, rivals are getting faster, cheaper and arguably smarter.
Going It Alone
Other Japanese brands are taking a different route. Toyota Motor Corporation and Nissan Motor Corporation have teamed up with Chinese partners to learn new tricks and push out more affordable EVs. Honda, by contrast, is trying to fix itself from within.
There is also a global angle to this rethink. Honda is eyeing India as a production hub for a new wave of electric models, including an upcoming global EV scheduled later this decade. Lower costs and growing expertise could help close the gap, but will the eliminate it altogether? Some industry experts aren’t convinced.
