Honda Motor outsources new vehicle programme to Tata Tech to cut costs

Honda Motor Co. has outsourced development of a new vehicle programme to Tata Technologies Ltd., people familiar with the matter said, the first time the automaker is entrusting an Indian engineering services firm with building an end-to-end platform to help cut costs.

This platform is expected to support multiple car models, the people said, asking not to be identified as the details are private. It is intended to accommodate conventional fossil fuel-powered models as well as electrified powertrains for hybrids and electric vehicles, the people added. They did not specify the markets where these Tata-engineered vehicles might be sold.

The farming out of this crucial function marks a departure for Honda, which has typically kept development of core vehicle platforms largely in-house or within its established supplier network. It comes as the Japanese automaker overhauls its product roadmap after reporting its first annual loss since its founding in 1948, shelving several planned electric vehicle programmes and accelerating cost-cutting efforts.

The company “is always considering the possibility of various external partnerships as part of its efforts to strengthen its competitive edge,” a Honda spokesperson said in an email, while declining to comment on market speculation or any details regarding specific partnerships.

A Tata Technologies spokesperson did not immediately respond to an email requesting comments.

Speed is also of the essence for Honda in India as it continues to operate with an outdated and thin portfolio, trailing rivals like Maruti Suzuki India Ltd. and Toyota Motor Corp. in a country it has identified as a key market alongside Japan and North America. While Honda does not sell currently sell battery EVs in India, local powerhouses Tata Motors and Mahindra & Mahindra have launched numerous models to capture the market early.

Honda’s market share has shrunk to less than 2% in the world’s third largest car market from a peak of 7% over a decade back.

Honda has leaned on partner carmakers like General Motors Co. in the past for development of some of its models, notably the recently-discontinued Prologue and Acura ZDX. This, however, is the first time the carmaker is tapping an Indian engineering services firm for an entirely new vehicle platform.

Growing Role
The move also highlights India’s growing role as a global engineering hub for the industry, with foreign automakers from Mercedes Benz Group AG to BMW AG and now Honda increasingly outsourcing vehicle development work to shorten development cycles and lower costs.

Without naming Honda, Tata Technologies Chief Executive Officer Warren Harris told analysts in July that his company was making progress on “a full vehicle development programme with a leading Japanese automotive” original equipment manufacturer.

Tata Technologies, part of the Tata Group, provides engineering and digital services to automotive, aerospace and industrial clients. The engagement with Honda signals a breakthrough with a customer base traditionally difficult for outside engineering providers to penetrate.

For Honda, the decision reflects a broader rethink of how it develops future vehicles. The company plans to “utilize external resources more flexibly and strategically,” CEO Toshihiro Mibe said in May. He cited the cost competitiveness and speed available through engineering talent in India and China as Honda adapts to a more uncertain global market.

The Japanese automaker has said it will introduce a new family of cars in India beginning in 2028 while expanding the country’s role as a manufacturing and export hub serving markets across Latin America and Southeast Asia.