Honda hands India car development to Tata Technologies

Honda is handing the development of its Indian-market cars to Tata Technologies, aiming to cut costs by up to 20% and halve development times from around five years, sources familiar with the matter have told Reuters. The partnership is a sharp break from the independence that has historically defined Honda, and it was prompted by a collapse in the company’s Indian market share to just 1.3% from a peak of 7.3% more than a decade ago.

According to two of the sources, Honda’s Japanese managers wanted to keep established suppliers to protect quality, while its Indian team pushed for local suppliers to reduce costs and speed up development. This led to a deadlock that caused the work on some products to be delayed. In a statement to Reuters, Honda denied any disagreement but acknowledged it had not offered a lineup giving Indian customers “value for money” and said it was “redefining” its offer there.

Tata Technologies, formerly a subsidiary of the Indian conglomerate, was chosen for its extensive access to local suppliers and its feel for consumer preferences. Honda, for its part, will oversee quality and retain control of technology, connectivity and ADAS. The first model under the deal is a sub-compact SUV due in 2028, followed by a midsize SUV and, later, an attempt to revive Honda’s sedan business.

At the time of writing Honda’s Indian portfolio has shrunk to four models, with little presence in SUVs, the country’s largest and fastest-growing segment. Meanwhile local players Tata Motors and Mahindra, alongside VinFast and Chinese players, have eaten into that share with affordable mass-market offerings. Honda’s habit of adapting cars designed for Japan or other global markets left it with vehicles seen as over-engineered and expensive. “We need to rebuild the business on an entirely different footing,” President Toshihiro Mibe conceded in May.

The reset fits a wider retrenchment. Honda expects cumulative electrification-related losses of more than US$12bn as a result of various walkbacks and cancelled plans. It posted its first-ever annual loss for FY2025 and is pivoting to hybrids while seeking more than US$9bn in cost savings over four years. India, the world’s third-largest car market and still largely closed to Chinese EV makers, is Honda’s only major emerging market, and success with the first model could make it an export base.

The deal comes with notable tensions. Tata Technologies was spun off from Tata Motors, one of the rivals gaining share at the expense of Honda, and the Japanese automaker is keeping control of connectivity and ADAS features: the very areas in which rivals have outgunned it. Even a halved development cycle of around two and a half years would also leave Honda slower than Chinese automakers, which can often bring a new model to market in less than two years.

The partnership is effectively an admission that Honda’s global engineering model cannot produce cars Indian buyers want at prices they will pay, and that its Indian business needs local judgment more than Japanese control. That makes the 2028 SUV a test of whether Honda can let go, not just whether Tata Technologies can deliver. At a 1.3% share, a car that merely matches Tata Motors and Mahindra on price and features may not be enough to restore Honda’s relevance in India.