Honda revives R&D unit, shifts thousands of engineers to counter China sales slump
Honda Motor will reestablish Honda R&D as an independent entity from April 1, moving several thousand automotive engineers into the revived unit to boost creative freedom and innovation. This move targets accelerated development after China sales fell 24% to 640,000 units in 2025 as local rivals halve model launch times.
1. Revival of Independent R&D Unit
From April 1, Honda Motor will transfer several thousand engineers working on automotive development into a standalone Honda R&D entity, restoring the unit’s independence to foster creativity and faster project cycles.
2. Historical R&D Structure and Reversal
Honda R&D was first spun out in 1960 to insulate engineers from business-led decisions, merged back under Honda Motor in 2020 for efficiency under then-president Takahiro Hachigo, and is now being spun out again by current president Toshihiro Mibe.
3. Competitive Pressures from China
Chinese automakers and suppliers now develop new models in 18–24 months—about half the time of Japanese peers—and utilize fully automated factories, prompting Honda to seek greater R&D agility to remain competitive.
4. Declining China Sales and Postponed EV Launch
Honda’s China sales fell 24% to 640,000 units in 2025, marking a fifth consecutive year of decline; the company also postponed its 2025 China launch of a flagship EV under a local brand after forecasting missed sales targets.