Honda Motor (TYO:7267) will move its automotive development division back to its R&D subsidiary, Honda R&D, in a bid to revive innovation and strengthen competitiveness in next-generation vehicles, Nikkei reported Tuesday.

The automaker had absorbed mass-production vehicle development into the parent company in 2020 to improve efficiency, but the latest reorganization will give the development team greater independence, according to the report.

Honda R&D will oversee an integrated structure from advanced research through development to encourage freer thinking, the report said.

The shift comes as competition intensifies with Chinese automakers such as BYD (SHE:002594, HKG:1211) gaining price strength and global leadership shifting away from Japanese brands. Honda's auto business has struggled, posting an operating loss of 73 billion yen in the April-September period and a 20% drop in China sales in 2025, according to the report.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)