The Evolution of “Human Capital Management” and “Digital” to Accelerate Transformation

In this phase of business transformation, which can be described as the “period of the ‘second founding’ of Honda.” we believe it is essential to further evolve our initiatives in “human resources,” which form the backbone of the Company, and “digital” areas, which support business operations. By doing so, we aim to build a strong and flexible business foundation and accelerate the transformation process.
To advance our core business transformations in “electrification” and “intelligence,” we will globally visualize and secure the human capital required. We will focus on rapidly fulfilling the need for talent in key areas such as software, batteries, and digital technologies. Additionally, based on the direction indicated by our Global Brand Slogan, we will create an environment where each individual working at Honda can fully leverage their abilities toward realizing their “dreams.”
In the rapidly evolving digital domain, we will steadily advance the development of advanced digital platforms to support our extensive business operations as a comprehensive mobility company. By leveraging exceptional digital technologies across various products and services, we aim to create new value that delivers a range of surprises and excitement.

Human Capital Strategy Supporting Evolution as a “Comprehensive Mobility Company”

As the transformation driven by “electrification” and “intelligence” accelerates, it is essential for Honda’s people and organization to evolve in alignment with this business transformation. It is crucial to develop a talent portfolio that aligns with Honda’s future vision and the corresponding management and business strategies. We will also strengthen our efforts to ensure we have the right talent in place at the optimal time.
From this perspective, Honda has identified two major directions for human capital management that need to be addressed in both the short to medium term and the medium to long term. The first is the “ensuring both quantity and quality of human resource in focus areas,” and the second is the “activating associates’ intrinsic motivations and fostering the collaboration of diverse individuals” We will define the desired state for each materiality, set quantitative goals linked to these objectives as management indicators, and implement effective measures swiftly through regular monitoring by the management team.
In Honda’s human capital management, we aim to further enhance corporate value by implementing multifaceted initiatives from various perspectives. Based on our shared values of the Honda Philosophy, we will continue to challenge ourselves to be a company where passionate individuals come together, and diverse people can shine, driven by their “dreams.”

Ensuring Both Quantity and Quality of Human Resource in Focus Areas
Global Management of Human Capital to Establish Competitive Advantage

To enhance competitiveness in new focus areas such as software, batteries, and digital technologies, it is essential to gather diverse expertise from both existing and new domains globally and integrate it at a high level to drive new value creation. To adapt flexibly to future changes in the business environment, we will work on visualizing human capital from both “quantity” and “quality” perspectives across the global organization and building a foundation to align business and talent portfolios.
In focus areas, we will invest unprecedented levels of resources and expand specialized training programs, including collaboration with academia and government, to develop highly skilled professionals. We will also continue to focus on nurturing and securing talent that can thrive globally.

Activating Associates’ Intrinsic Motivations and Fostering the collaboration of Diverse Individuals
Strengthening and Reforming an Organizational Culture to Drive Transformation

To accelerate various initiatives for business transformation, it is essential to create an environment where every associate at Honda can fully realize their potential. We are refining all elements that make up our corporate culture to ensure that each individual finds meaning in their work, is passionate about it, has clear personal goals and dreams, and is fully committed to achieving them. Additionally, we are assessing whether the support provided for these challenges is adequate.
Honda has embraced ambitious goals with each individual’s “power of dreams” and “speed,” achieving even greater dreams through the interaction of diverse knowledge and aspirations. We are committed to creating a corporate culture that embodies “The Power of Dreams,” where every associate can fully realize their potential, and we are dedicated to this effort with all our strength.

Evolution of Digital Platforms Supporting Business Operations

Recognizing Challenges in the Digital Domain

In advancing the electrification and intelligence of products and services, it is essential to evolve operations across all areas of product development, production, and sales, and to create new value. We recognize that it is urgent to renew core IT systems that support business operations and to establish a digital platform that maximizes the value of data.
We have set forth our DX vision as "Enhancing business transformation speed and operational efficiency through the reform of business processes using digital technology to establish a competitive advantage," and we are advancing various initiatives to achieve this.

Overall Strategy for Developing Digital Platforms

In the business model centered around electric products, we define the values we aim to achieve as “customer value,” “product value,” and “societal value.” By maximizing and optimizing the use of business systems and data, we strive to create sustainable business value.
To achieve these three values, Honda’s direction for evolving digital systems is as follows:

Customer Value

Digital services have become widespread in society and are transforming the purchasing experience across many industries. In the mobility sector, this experience is also evolving. To provide new value that meets various customer needs, we will refresh and introduce new systems that span the entire customer journey with digital services.
By extensively and seamlessly connecting the digital technologies that create in-vehicle experiences with those that enhance out-of-vehicle experiences through applications and digital infrastructure, we can more effectively utilize data and provide services tailored to each customer’s usage scenarios. Additionally, we will expand the foundation for updating vehicle software based on usage data, starting with a launch in North America in 2025, to continuously improve the functionality and quality of our services.

Product Value

The design, development, mass production, and sales processes for traditional gasoline engine vehicles and HEVs (Hybrid) differ significantly from those for EVs, which have distinct concepts and business models. Therefore, a comprehensive overhaul of the business systems across these areas, including addressing obsolescence, is necessary. By optimizing and connecting the processes in each area of EV business operations, we aim to enhance our competitive edge and strengthen our internal capabilities.
The core systems for EV business operations will not only support manufacturing operations but will also aggregate and visualize cross-functional operational data in real-time. This will enable timely, data-driven management decisions and planning, and will be developed as a new, globally unified digital platform.
This digital platform is based on the concept of “Fit to Standard,” aiming to achieve consistent and highly efficient business operations by connecting business processes, IT systems, and data end-to-end. We are progressively updating the core systems in line with the EV lineup plan.

Social Value

We will update and implement new corporate environmental systems to address the European Battery Regulation and other initiatives, focusing on the collection and analysis of environmental impact data from products and corporate activities, and effectively utilizing this data across various businesses, regions, and functions.
Especially for environmental data related to mobility company, which must be collected and utilized in collaboration with various stakeholders across regions and countries, we will build an organization-wide system. This includes improving and updating internal systems, establishing company-wide aggregation standards, and connecting with industry-standard data platforms, all while aiming to achieve “Triple Action to ZERO.”
As a specific example of our initiatives, we are advancing systemization and prototype verification for the collection and repurposing of batteries installed in EVs. Additionally, we are planning to visualize CO2 emissions across global automobile production, starting with the Yorii Plant, with the aim of expanding this initiative to next-generation and existing factories.
Through these efforts, we are standardizing data from business systems based on business and regional processes and bundling it for various service and business applications. This will support the development of various business models by advancing the construction of a service and data platform.
The digital transformation of business operations is essential for Honda’s second founding. To advance this, we are forming and promoting a digital infrastructure task force directly connected to management, while appropriately securing the necessary resources for the medium- to long-term.

Establishment of an Environment for Efficient Business Operations Utilizing Digital Tools

In addition to building digital platforms to support business operations, we are also working on establishing environments that enhance efficiency in day-to-day tasks by utilizing digital tools such as generative AI and office software.

Evolution in Practical Areas – Leveraging Generative AI

To enhance operational efficiency and create new value, we actively use generative AI, exemplified by chat-based applications.

Building and Operating Generative AI Platform for the Accumulation and Utilization of In-House Expertise

The documents accumulated within the Company over time contain a wealth of important information, but efficiently utilizing this information has been challenging, especially with the loss of know-how due to personnel changes and retirements. To address this issue, we have built a company-wide generative AI platform aimed at accumulating and utilizing valuable information as know-how. The foundation of this platform was completed in March 2024, and we are progressively accumulating know-how starting from the areas of product design and development.

Utilizing Generative AI Tools for Administrative Tasks

Email, online meeting systems, and various office tools used for document creation and daily tasks have become indispensable in our everyday operations. To utilize these tools more efficiently than ever, we have introduced “Microsoft 365 Copilot” a generative AI tool that leverages AI assistants to boost productivity. This environment has been set up for approximately 20,000 associates. By making the use of generative AI a standard practice in daily operations, we aim to achieve significant operational efficiency and create new value.

Extensive Utilization of Generative AI in Business Activities

We believe that generative AI is a tool that can be utilized not only in daily operations but also more broadly and deeply across all business activities. For example, in the early conceptual stages of innovation, we use image generation AI, and in the phases focused on improving product quality, we collect a wide range of data, including design, production, and user information, from both internal and external sources. We are actively advancing initiatives to integrate generative AI into various aspects of our business activities.
We are advancing the development of our internal digital environment through two major approaches: the evolution of digital platforms that support business operations and the creation of an environment that streamlines work through digital tools. As the digital world continues to evolve daily, we will continue to accelerate these initiatives moving forward.

Developing Talent to Leverage the Strengths of Digital Technology

To keep pace with the rapidly evolving digital technologies, it is essential not only to actively recognize, nurture, and support the expertise of highly skilled experts within the Company but also to ensure that every individual at Honda, including the management team, acquires a certain level of digital skills. We are advancing initiatives to enhance digital literacy among all associates, enabling them to effectively utilize digital tools and both internal and external data.

1. Company-Wide Software Training

In the software domain, which is one of the key areas for business transformation, we have established five learning areas—Business Architect, Data Scientist, Cybersecurity, Software Engineer, and Designer—ensuring that all Honda employees, regardless of business unit or job function, can acquire fundamental knowledge. We have developed an e-Learning program based on these areas and rolled it out across the Company, accompanied by messages from the management team. We selected the mandatory participants from all associates, and approximately 30,000 people took the program.

2. Training Department Leaders for Efficiency in Daily Operations (Top Guns)

Efficiency measures using digital tools and data are no longer the sole responsibility of the IT and digital divisions. It is now essential for all associates to master the use of digital tools and data, and to broadly implement IT and digital strategies. This approach is necessary to drive the evolution of everyday work across the organization.
With this mindset, we have selected “Top Guns” in each department to lead efficiency initiatives that leverage IT and digital tools. These individuals receive training to independently implement these strategies. As of now, we have completed the development of Top Guns in approximately 400 departments, primarily in management areas. The execution of efficiency initiatives by these Top Guns in their respective departments has resulted in a reduction of approximately 2.42 million labor hours as of FYE Mar. 31, 2024.

3. Recognizing and Utilizing Experts with Advanced AI Technology(Gen-AI Experts)

Honda has been early to recognize the potential of generative AI, which is attracting global attention, and has been advancing efforts to leverage this technology. By appropriately utilizing generative AI, we believe that we can not only dramatically enhance operational efficiency but also create new value.
Based on this approach, we introduced the “Gen-AI Expert Program” in June 2024 to identify associates with rare and valuable expertise in generative AI and to promote the application of their expertise. This program is designed to enable associates with high levels of specialization, particularly in generative AI, to participate flexibly in cross-organizational projects. This initiative aims to accelerate company-wide efforts to leverage AI.

4. Managing In-House DX Community and Hosting Events Involving All Associates

We are developing an online community centered around associates who promote digital utilization, such as Top Guns and Gen-AI experts, can exchange information and enhance their skills through events and interactions. Notably, the internal community “Borders,” which focuses on programming and generative AI, has grown to approximately 2,000 members. This community actively shares the latest digital-related information, engages in discussions, and supports study sessions on the use of AI tools, fostering vibrant knowledge exchange.
Additionally, we hold an annual internal online event called the “Honda DX Expo,” which provides opportunities for associates to engage with digital tools and data utilization. The event includes sharing of practical examples, hands-on sessions and study groups for various tools, and lectures by external experts. In its third year in the Fiscal Year Ending March 31, 2025, the expo attracts over 10,000 participants and significantly contributes to fostering a culture that strongly promotes digital transformation across the Company.