Honda, which has been reeling due to a series of recalls in the U.S., scrapped its global sales target of 6 million units by the end of 2017 as it follows the example of one of its principal Japanese rivals, Toyota, which is also scaling back sales targets.
Takanobu Ito, Honda’s chief executive, told reporters during a test drive in northern Japan that Honda will reduce the number of variations of its vehicles it manufactures. This will reduce the workload of its over-taxed engineering staff and protect the company’s reputation for quality, which has been undermined by a series of safety-related recalls of airbags made by Takata Corp., which was once one of its most trusted suppliers.
“We want to be more efficient,” Ito said, according to the Wall Street Journal. “Even though we’re narrowing these down that doesn’t mean our business would shrink.”
For instance, the company could keep one model while getting rid of a less popular sister model that shares many product characteristics, but has some different features, executives said. Ito declined to name specific products that could be affected with the plan.
Ito also said that Honda would not be providing financial assistance to Takata, the troubled maker of air bags and safety equipment. Troubles with Takata-made air bags forced Honda to recall more than 5.4 million vehicles in the U.S., one of the company’s most important markets. Takata has long been a part of the Honda “family” of supplier companies and Ito’s decision not to help the troubled company has drawn criticism in Japan.
But Honda also has had serious issues with Honda Fit, which has been recalled five times now in Japan.
(Honda makes dramatic shift with 2016 Pilot. For more, Click Here.)
In addition, while its sales in the U.S. grew by 1% last year, the sales growth failed to keep pace with the growth of the overall market. Last week in Chicago, Honda executives said they were planning to pay greater attention to the truck segments, which are getting more attention from American buyers.
It plans to introduce a new version of the Honda Pilot, Acura RDX and Honda Ridgeline pickup as well as a new compact utility vehicle, the HR-V, during the next several months, Honda officials said.
(Click Here for details about Honda upping its truck game.)
Honda had to set aside $425 million to cover expenses related to the airbag recalls. Honda’s consolidated operating income for the fiscal third quarter, which ran from Oct. 1, 2014 through Dec. 31, dropped 22.5% compared to the same period last year, due to profit-reducing factors such as a difficult automobile market environment in Japan and an increase in quality-related expenses, mainly in North America, which more than favorable currency effects associated with depreciation of the Japanese yen.
Toyota also has been reducing its production schedules to deal with quality issues that have undermined the company’s reputation for building durable vehicles that rarely, if ever, breakdown.
(To see why Honda tops the list of best value for the money, Click Here.)
The slower tempo of production, slower sales in Japan and its inability to match the sales gains of key North American and European rivals in China could cost Toyota its global sales crown this year to Volkswagen AG with its multiple brands and strong position in the luxury
There is no reason why any car maker should be helping Takata financially. In fact Takata should be shouldering the total cost for the defective products they shipped.
As far as reliability is concerned I have felt for years that Toyota and Honda were over-rated on reliability and had similar issues as all other car makers.
As we’ve recently observed Honda has failed to report safety issues which is unacceptable, but with Consumer’s Report hawking Toyota and Honda as being exceptionally reliable for decades…it’s tough to change public perception that this is not necessarily still the case.