Last week, Honda made the official statement that their engines are "decent enough to compete in Formula One" and that they "are happy with the progress shown so far". I don't know if Honda are necessarily the most objective of observers here and I would rather take the opinion of McLaren driver Fernando Alonso who has frequently described the Honda engines in the back of his car by the use of four letter expletives.
Honda's engines in Formula One have been nothing short of abysmal. They've been hopelessly underpowered and unreliable and Fernando Alonso wishing Toro Rosso all the best of luck for the 2018 season, has the ring of someone wishing a Merry Christmas to a turkey. It's little wonder that Carlos Sainz Jr jumped ship this year because if a Honda powered Toto Rosso manages to win even so much as a single point next year, I will be surprised.
In the case of Honda, they arrived at the current set of rules late. In the the two seasons thanks they've been running the turbocharged hybrid cars, they've always been quite a bit down on performance. The main problems that Formula One presents are that there are neither enough days of testing permitted in a year; nor is there enough leeway to improve an engine if it turns out to be a monumental dud which Honda's current engine and drivetrain are. The way that the rules are currently set up, if you have an engine which is good, then that advantage is more or less permanently locked in; hence the reason why Mercedes Benz have been so dominant for so long.
If I was Grand Poobah and Lord High Everything Else at Honda, then I would seriously consider not scaling back the engine program but expanding it to run at the toughest laboratory in the world, the Le Mans 24 Hour race.
Honda is already building the engines and so as far as that side of the equation goes, that's covered. Honda also builds cars for the Super GT series in Japan in the GT 500 class, with their NSX Concept-GT. As someone who has been enjoying the Super GT series, it seems logical to me that if Honda wants to improve the reliability of the engines, then they should run them in a theatre where they will keep on running until they fail.
This road has already been travelled down before. In the late 1970s when Renault's famous 'Yellow Teapot' earned its nickname because it kept on blowing itself to pieces in a great cloud of steam, Renault doubled down on their efforts and built the Renault Alpine 442. It would eventually go on to win Le Mans and in the process, they nearly became the first company to win the Formula One Driver's Championship with turbocharged engines in 1983 but were beaten to the post by BMW. Renault's Formula One effort never really took off until they found the limits of turbocharger technology by finding an even tougher laboratory to run in.
My solution would be for Honda to build a variant of their Formula One engine and put it in either the LMP1 or LMP2 class at Le Mans, or at least run it in a GT3 car in the Spa 24 Hour race and see where the engine breaks and more importantly why. Running an engine for 24 hours is basically the equivalent of running 12 Grands Prix back to back and although there might be a step down in the peak performance demanded from the engine, that's kind of counterbalanced by the sheer scale of the undertaking.
Mind you, the other option for Honda could be to just admit that this particular iteration of their Formula One program is a disaster and they should consider just leaving Formula One again. McLaren's patience has been tested and broken and they will be running Renault powerplants in 2018, and I very much doubt whether Toro Rosso will be all that much of a benefit to Honda; in the same way that Honda definitely has not been a benefit to McLaren.