Honda and Toyota make way for EVs

Toyota, Japan's top car manufacturer, says that higher costs to develop new technologies like electric vehicles (EVs), ride-sharing services and connected cars were ramping up pressure to generate savings wherever possible, while Honda says it would strip down its vehicle lineup to cut production costs.

“We still weren’t able to improve our costs enough last year,” told Toyota CFO Koji Kobayashi Reuters, adding that mounting investment required for new technologies and other research and development costs was making cost-cutting efforts a challenge. “We need to work to find new ways to reduce costs this year."

Honda CEO Takahiro Hachigo said it would cut the number of car model variations to a third of current offerings by 2025, reducing global production costs by 10 per cent and redirecting those savings toward advanced research and development.

“We recognize that the number of models and variations at the trim and option level have increased and our efficiency has declined,” said Hachigo.

According to Reuters, competition due to ride-sharing technology and the race to develop self-driving cars have caused rapid and costly disruption to the auto industry.

Toyota President Akio Toyoda said: "From here on will be an age in which the difference between victory and defeat will be decided by the last one mile, which will be our contact point with customers."

"Merely depending on the business model of the past will not lead to the future," concluded Toyoda.