Hammered by the recall of more than 20 million vehicles due to faulty airbags, as well as a nearly 9% decline in profits, Takahiro Hachigo has a tough job ahead as the new CEO of Honda Motor Co.
The lifelong employee of Japan’s third-largest automaker laid out his vision of a turnaround during his first official news conference since being promoted to CEO last month. While Hachigo was short on specifics, he offered a broad outline that will bring more products and could see Honda enter new alliances and joint ventures with erstwhile rivals.
“I plan to create a new Honda,” he told reporters at Honda’s Tokyo headquarters, adding that his goal is to tap into “the power of Honda people.”
The newest and traditionally most maverick of the major Japanese auto companies, Honda has often shown a spunkiness and streak of independence that has run counter to the country’s traditional corporate culture. Critics contend it has lost some of that spark in recent years.
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But Honda has faced a variety of problems, including the recall of about 20 million vehicles worldwide due to faulty airbags supplied by its long-time supplier Takata. The cost of those recalls was one of the major factors behind a 19% drop in operating profit and a 9% dip in net earnings for the fiscal year that ended on March 31.
The crisis led to the unexpected departure of Hachigo’s predecessor, Takanobu Ito. Ito had been pushing to revitalize Honda’s product line-up, especially in the green car space. Though Honda had launched its first hybrid vehicle about the same time as rival Toyota, the smaller company never gained the same traction with buyers.
Under Ito, Honda engineers developed an assortment of new battery-electric drivetrains, as well as a second-generation fuel-cell vehicles. But while Toyota’s new Mirai hydrogen car recently went on sale, Honda has delayed the launch of its new model due to its recent problems.
Hachigo appears set to continue his predecessor’s focus, telling journalists, “We will focus on the development of innovative products.”
Among the new models to come is a three-motor hybrid supercar that will be sold in the U.S. by the Acura division as a replacement for the old NSX sports car. A smaller version for the Honda brand is reportedly under development. Honda has also confirmed development of a mini sports car dubbed the S660.
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Honda is also rolling out a series of new turbocharged engines that will be used in a variety of its product lines.
But Hachigo did not offer specifics on new products he might want to add to Honda’s plans, or detail the ways in which he might shift direction from the product plans laid out by Ito.
The new CEO did, however, announce one important shift, making it clear he is not wedded to the goal of boosting Honda’s annual global sales to 6 million by the end of the fiscal year in March 2017.
“Rather than focusing on numbers, it is important to come up with products that carry dreams and satisfy our customers,” he emphasized. “We will focus on the development of innovative products.”
For Hachigo, part of the challenge will be better integrating Honda’s global product development and assembly operations to drive down cost, speed up time to market and reduce excess capacity. Among other things, Honda is expected to continue shifting to its overseas factories as export bases rather than relying on its home market plants. All told, about 81% of Honda’s automobiles are currently produced outside of Japan.
But the company has a broad array of other product lines to deal with, from portable generators to motorcycles to its new Honda Jet which has just one approval and could soon be landing at airports around the world.
Insiders say Hachigo is especially well-suited to oversee the global Honda of today. In his 33 years with the automaker – which he joined in 1982 as a chassis engineer – he has worked on three continents, most recently leading operations in China until called back to Japan earlier this year.
“I love Honda, and I grew up in Honda,” Hachigo said at the carmaker’s headquarters. “I want to give back to Honda.”
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One response to “New Honda CEO Lays Out Turnaround Plan”
Notice the difference in facial expressions of the incoming and outgoing CEOs. Even when they both smile Ito appears to be frowning.
I’m not so sure Honda has lost their way as much as they have to resolve QC issues much like VW. It’s hard to believe that Honda needs to be selling airplanes however but maybe it is a viable niche.