New Honda CEO Shifts Focus to Technology

 

Honda Motor Co.’s new chief executive is making a break from his predecessor by prioritizing new technology, while stepping back from the aggressive sales targets the Japanese auto maker had struggled to meet.

In his first news conference as CEO, Takahiro Hachigo said he wants to ensure employees have enough time to develop strong products, as Japan’s No. 3 car maker behind Toyota Motor Corp. and Nissan Motor Co. grapples with slowing sales growth, quality lapses and overworked engineers.

“I want to prioritize the development of Honda-like products rather than expanding sales volume,” the 56-year-old, who became CEO in June, said at Honda’s headquarters in Tokyo on Monday. “The team that’s involved in on-the-ground development needs to spend time to develop better products, and I want to support them by making sure that time is secured.”

Mr. Hachigo’s tenure kicks off as Honda faces a crossroads: After five decades of making cars, Honda lacks the size or cash of larger rivals such as Toyota. Honda has long projected a youthful brand image and stressed technological innovation, but some critics say those traits have been diluted as the company has grown.

In recent years, Honda engineers haven’t had much time to develop models, as the auto maker sought to rapidly expand car sales. Mr. Hachigo’s predecessor, Takanobu Ito, who took over as CEO in 2009, had set out to nearly double Honda’s annual car sales to six million vehicles over five years by the fiscal year ending March 2017.

To meet deadlines, overtime had become the norm for some Honda engineers. But they still didn’t have enough time to develop new technologies to help Honda distinguish itself from rivals, executives have said.

What Honda needs to do “is to improve efficiency and productivity in vehicle development,” said Satoshi Nagashima, an automotive strategy consultant and co-managing partner at Roland Berger Strategy Consultants. That would result in more time for engineers to do their work, he said.

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Honda has abandoned its 2017 sales target, which it was far from reaching — in the year ended March 2015, it sold 4.4 million vehicles. Analysts said it also faced drawbacks from its rapid expansion, including a spate of recalls and excess manufacturing capacity, though in the long run, its push into emerging markets could help boost its competitiveness.

Some critics blamed Mr. Ito’s top-down management style and his push to move products to market quickly for Honda’s troubles.

In contrast, Mr. Hachigo on Monday played up the importance of teamwork and communication, vowing to build an environment that adopts more ideas from people actually involved in projects. Mr. Hachigo plans to visit all of Honda’s plants in Japan by the end of this month, he said.

Mr. Hachigo said that when he was an engineer involved in vehicle development, including the U.S. version of the popular Odyssey minivan, he learned the importance of sharing goals among multinational team members. Just last week, Honda said it is setting English as its corporate lingua franca by 2020.

This push for a more international culture at a traditional Japanese auto maker isn’t unique to Honda. Toyota in March announced appointments of several non-Japanese to high-ranking positions, including Frenchman Didier Leroy, who in June became executive vice president, the highest post ever held by a non-Japanese at the company.Toyota Managing Officer Julie Hamp , an American who took her post in April, quit last week after her arrest over alleged illegal drug imports into Japan.

Mr. Hachigo said Honda will develop technologies on its own as much as possible, but added he is open to considering cooperation with other auto makers if there are benefits. Honda currently partners with General Motors Co. on fuel-cell vehicle technology.

Mr. Hachigo’s strategy is likely to take time to bear fruit: In general, auto makers take some four or five years to develop new models.

Another priority for Honda is to make use of its excessive production capacity world-wide, Mr. Hachigo said. Honda’s general policy has been to make more cars locally, but now it will also ship more cars between regions, he said.

Honda continues to be embroiled in recalls over air bags made by Takata Corp, with Honda’s recall tally ballooning to 20 million vehicles world-wide over the past seven years. Takata faces mounting costs related to what has turned out to be the biggest automotive recall in U.S. history involving more than 10 auto makers. Mr. Hachigo said that at this moment, Honda has no plans to offer support to Takata.

 

Honda Motor Co.’s new chief executive is making a break from his predecessor by prioritizing new technology, while stepping back from the aggressive sales targets the Japanese auto maker had struggled to meet.

In his first news conference as CEO, Takahiro Hachigo said he wants to ensure employees have enough time to develop strong products, as Japan’s No. 3 car maker behind Toyota Motor Corp. and Nissan Motor Co. grapples with slowing sales growth, quality lapses and overworked engineers.

“I want to prioritize the development of Honda-like products rather than expanding sales volume,” the 56-year-old, who became CEO in June, said at Honda’s headquarters in Tokyo on Monday. “The team that’s involved in on-the-ground development needs to spend time to develop better products, and I want to support them by making sure that time is secured.”

Mr. Hachigo’s tenure kicks off as Honda faces a crossroads: After five decades of making cars, Honda lacks the size or cash of larger rivals such as Toyota. Honda has long projected a youthful brand image and stressed technological innovation, but some critics say those traits have been diluted as the company has grown.

In recent years, Honda engineers haven’t had much time to develop models, as the auto maker sought to rapidly expand car sales. Mr. Hachigo’s predecessor, Takanobu Ito, who took over as CEO in 2009, had set out to nearly double Honda’s annual car sales to six million vehicles over five years by the fiscal year ending March 2017.

To meet deadlines, overtime had become the norm for some Honda engineers. But they still didn’t have enough time to develop new technologies to help Honda distinguish itself from rivals, executives have said.

What Honda needs to do “is to improve efficiency and productivity in vehicle development,” said Satoshi Nagashima, an automotive strategy consultant and co-managing partner at Roland Berger Strategy Consultants. That would result in more time for engineers to do their work, he said.

ENLARGE