Honda Motor (HMC.US) reportedly plans to reduce costs by over 9 billions USD, requiring suppliers to lower prices and expand procurement of Chinese components.

According to reports, Honda Motor (HMC.US) plans to cut costs by over $9 billion in the next four years and has asked suppliers to significantly reduce prices and increase the use of China-made components as much as possible.

According to related documents and sources, Honda aims to achieve a 30% cost reduction in three key component categories: stamped and forged parts, electrical components, and components related to software-defined vehicles (SDV). The documents indicate that this move will help Japanese suppliers better compete with their Chinese counterparts.

The automaker now plans to save 1.5 trillion yen (about $9.4 billion) by 2030.

The documents also show that Honda’s direct suppliers (known as “Tier 1 suppliers”) are also being asked to reassess their material sourcing practices and are encouraged to use standardized parts from Tier 2 and Tier 3 suppliers to help further reduce costs.

According to the documents, Honda’s management has also asked suppliers to expand the use of China-made components as much as possible. The report notes that this cost-cutting target is “extremely ambitious,” and it remains unclear whether the targets can be achieved.

Japanese automakers are facing fierce competition from Chinese rivals. With advanced software and battery technologies and cost-effectiveness, Chinese electric vehicle brands are making significant inroads in Southeast Asia, Latin America, and European markets, capturing notable market share.

A Honda spokesperson stated that the company is working with global suppliers to improve competitiveness and reduce costs through various means, such as adopting standardized components.

In U.S. pre-market trading on Wednesday, Honda Motor’s U.S. shares fell 0.7%. The stock has risen nearly 12% so far this year.