JAPAN: New Honda president has a lot to sort out
Honda has been affected in Europe by slow product roll-outs. We're still waiting for the new Jazz (Fit production in Mexico in 2014 pictured) which was plagued by recalls in earlier launch markets
New Honda president Takahiro Hachigo, taking the reins from Takanobu Ito, is an insider who has spent his entire career at the company, a report said.
Ito's tenure was plagued by recalls and rupturing Takata air bags but Hachigo upholds a 41 year custom of Honda presidents hand picking their successors from within, Bloomberg News reported.
"Japanese electronics makers failed partly due to internally promoted top managers; I hope Honda won’t fall into the same rut," Kentaro Hayashi, a Tachibana Securities analyst in Tokyo, told Bloomberg.
The report noted Honda has so far relied on incremental steps, such as delaying new models and doing post production checks to improve quality, rather than more radical changes such as severing ties with Takata [though it reportedly has changed supplier for the next US Accord - ed].
Hachigo will need to decide whether to maintain the relationship with Takata. The carmaker owns a 1.2% stake in the supplier and is its biggest customer, according to data compiled by Bloomberg.
"Honda will keep facing difficulties for at least the next two to three years with the new president," Koji Endo, an auto analyst at Advanced Research Japan, told Bloomberg. "Quality problems are not completely solved yet, Takata is still in crisis and Honda’s business is not doing well in many markets."
Adding to Honda’s quality woes under Ito, 61, were five recalls for its top-selling redesigned Fit [Jazz] compact and three for its related Vezel SUV. Lapses with those models led the company to cut pay for executives, including Ito, for three months.
The quality problems were widely seen as a main reason for Ito’s departure. Days before announcing Hachigo's promotion, Ito abandoned a target to sell 6m vehicles annually by 2017.
Parissa Haghirian, a professor of management at Sophia University in Tokyo, told Bloomberg it was "clear" Honda needed a new strategy but it was doubtful whether Hachigo would have the power to shake things up.
"It remains to be seen whether the sense of crisis at Honda will lead to real changes in its management style and strategy development," Haghirian said. "I think we cannot expect the new CEO to implement drastic changes."
Koichi Fukuo, who was in charge of product quality at Honda before becoming president of its research and development arm, said insufficient communication contributed to the company’s quality problems. The easy-going Hachigo would help improve internal communication, said Fumihiko Ike, Honda’s chairman.
"He listens to people," Ike told Bloomberg. "The atmosphere at the company will change."
Engineer Hachigo was involved in models such as the first US-built Odyssey minivan and the CR-V. He then managed the company’s Suzuka plant in Japan and rose through the ranks via executive roles in Europe and China before becoming managing officer last year.
Bloomberg said his appointment surprised even among those loyal to Honda’s tradition of promoting presidents from within because of a unique gap in his resume. He’ll be the first CEO who hasn’t headed Honda R&D, the carmaker’s largely independent research arm, since Soichiro Honda founded the company in 1948.
Familiarity with the R&D unit is crucial at a time when automakers are racing to roll out new electric and fuel cell vehicles, the analyst Endo told the news agency.
"He’s got some huge tests in front of him," Ed Kim, an analyst at researcher AutoPacific in California said. "He is going to have to prove himself as having less of an autocratic style of doing business while at the same time being decisive enough to quickly and efficiently fix the problems that Honda faces right now, which are considerable."