India to be key pivot in Honda’s global reboot drive

Honda will launch India-focused strategic car models from 2028.

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Honda Motor Co will begin introducing “strategic models” tailored to the Indian car market from 2028.

The idea is to seek an optimal balance of performance and price to satisfy customers, said Toshihiro Mibe, Director, President and Representative Executive Officer at a business briefing in Japan on May 14.

More specifically, Honda will launch strategic models in two categories: vehicles under four metres in length, which constitute the largest volume segment, as well as midsize offerings. The objective is to proactively leverage local and external development resources and introduce new models as quickly as possible.

Honda Cars India has a factory in Rajasthan that rolls out models like the City, Amaze, and Elevate. The company has been around for three decades, but has not been able to make a dent in this competitive terrain. Maruti Suzuki and Hyundai have been calling the shots for long, but Tata Motors and Mahindra & Mahindra have begun firing on all cylinders and taken the second and third spots in the market.

Delivering the right cars, SUVs for India

According to Mibe, India is one of the few automotive markets in the world where strong growth is expected in the coming years. However, Honda is present in only a limited range of product segments and has not been able to fully expand unit sales. This has been largely due to an insufficient number of competitive models in each segment.

One contributing factor is that we have not been able to deliver products that meet customer characteristics and preferences in IndiaToshihiro Mibe, Director, President and Representative Executive Officer

“One contributing factor is that we have not been able to deliver products that meet customer characteristics and preferences in India. It has been our standard practice to develop and sell all products based on global standard performance specifications regardless of target countries and regions,” admitted Mibe.

However, climate conditions, vehicle usage, customer preferences, and other factors vary significantly from country to country and region to region.

Environmental and other regulations are different, too.

“Our global standard approach may have been somewhat excessive and therefore we will redefine the best specifications that fully match the market environment and customer needs in India,” he reiterated.

Revving up two-wheelers

However, when it comes to two-wheelers, Honda is in a much stronger space and has emerged as a fierce No 2 to its former ally, Hero MotoCorp. Mibe said motorcycles and scooters represented a “key strength” for the Japanese automaker whose annual India sales are nearly six million units, accompanied by a robust supply chain.

The company plans to “fully utilise” its competitiveness in two-wheelers and strive to grow by “steadily capturing” customers upgrading to automobiles. This April, it established Honda Digital Innovation India, a digital platform company.

“To address the diverse needs of our customers, we will enhance synergies between our motorcycle and automobile business in India,” said Mibe.

Additionally, a captive finance company is scheduled to become operational before the end of the current fiscal year ending March 2027.

“This will strengthen our financial services business and will help expand sales opportunities for motorcycles and automobile products,” he added.

Globally, Honda sold 22.1 million two-wheelers last fiscal, translating into a 40 per cent market share. The motorcycle and scooter market worldwide is expected to grow from the current 50 million units to 60 million by 2030.

We will be definitely taking an aggressive approach by taking advantage of the competitive resources leveraged from India and ChinaToshihiro Mibe

Eyeing higher global two-wheeler share

“We will further increase our share and enhance our presence in the market by introducing products well aligned with increasingly diverse customer needs and by optimising production capabilities,” said Mibe.

In its largest two-wheeler market, India, Honda ended FY26 with a 28 per cent share while delivering approximately 5.8 million units. According to the CEO, customer demand is trending toward stepping up from the current most popular 100cc class to 125cc and beyond.

A similar trend is being observed in Central/South America as well, and Honda plans to “steadily address the shift” in customer demand by launching attractive products and enhancing its sales network and service capabilities.

Mibe also observed that in Central and South America, emerging two-wheeler manufacturers from India and China are beginning to strengthen their business. “We will be definitely taking an aggressive approach by taking advantage of the competitive resources leveraged from India and China,” he said.

Moreover, Honda will further strengthen its production operations to accommodate expanding global demand in India. Plans are underway to increase two-wheeler production capacity to approximately eight million units in 2028.

Expanding exports to Central, South America

The efforts to build India as an export hub will include in-house production of parts and acceleration of local procurement to ensure cost-competitiveness and speed. “Thereby, we can expand exports to Central and South America where the conditions of the roads is close to India,” pointed out Mibe.

In Brazil, Indonesia, and the Philippines, the company will “progressively strengthen” its two-wheeler production and supply operations to establish a business environment that can accommodate demand.

The development of the dual-clutch transmission and a number of “original technologies” will offer “joy of riding” to young customers. Going forward, the goal is to create new value with local technologies unique to Honda that will differentiate it from emerging competitors.

Regarding electric vehicles, the growth momentum of the electrification market is “slowing as compared to initial projections”. In countries like Vietnam, where the shift to electric cars has progressed rapidly due to changes in environmental regulations, the outlook for the two-wheeler market is uncertain.

In India, we will introduce electric two-wheeler models that meet customer needs. As planned, we will also proceed with the construction of a factory dedicated to EV modelsToshihiro Mibe

Relentless pursuit of electric

“In India, we will introduce electric two-wheeler models that meet customer needs. As planned, we will also proceed with the construction of a factory dedicated to EV models. According to Mibe, their development will proceed “relentlessly”, and Honda plans to “capture changes” in the market environment and customer demand while taking a flexible and agile approach to product launches.

In order to deliver competitive products globally, the company will focus on strengthening its lean and agile manufacturing structure. This will involve a “fundamental cost reduction”, particularly with outsourced parts.

It will call for reassessing Honda-specific standards and using standardised components. This transition will also incorporate the competitiveness of local businesses in China and India.

There will also be a significant improvement in development efficiency, which will address three challenges the company faces in competition with emerging OEMs. These are development costs, (development) duration and (development) man-hours.

“We will reassess the so-called engineering chain management and increase our production efficiency by reducing each of the three items by half vis-a-vis 2025,” said Mibe.

Transforming the Honda development process

Beyond improving efficiency in design testing and production preparation, Honda will transform its development process through the use of a digital environment and AI. This will happen by reassessing development requirements, product planning, and development management. The idea is to reduce development costs and man-hours and shorten development time.

“Starting this fiscal year, we will reduce the development time for minor model change by half. Full model change development time will also be halved starting with development projects that start in 2028. This will enable us to reduce up-to-date products more quickly and continuously,” elaborated Mibe.

To establish a robust manufacturing structure capable of securing profitability, even when market conditions call for reduced production, Honda will aim to improve production efficiency by 20 per cent over the next five years.

This will be achieved by “efficiently injecting” an allocated resource investment into new models and equipment, along with increased efficiency and speed through the use of digital technologies.

Mibe acknowledged that, to build future competitiveness in-house, sourcing technologies and resources will be an effective approach. However, it will require substantial investments and resource allocation, which might lead to the loss of a competitive advantage.

“Hence, we will strategically leverage the cost-competitiveness and speed of local businesses in China and India and other countries or the use of industry standard components and so on. We can then improve our competitiveness by being flexible and with the strategic use of external resources,” he said.