New Honda CEO to focus on innovations, overseas production

Article by Christian Andrei, on July 9, 2015

New Honda CEO Takahiro Hachigo’s plan for the ailing brand includes reviving the development of more exciting models, optimizing overseas manufacturing to solve global overcapacity, and not setting numerical targets. At Hachigo’s first news conference since he took on the top position, he said that Honda will be more accepting of alliances and entering joint ventures with competition as it aims to share costs to develop technologies.

At the global headquarters, Hachigo said that he wants to build “a new Honda.” He said that he won’t be reinstating the target of his predecessor to reach 6 million in annual sales worldwide for the year that ends on March 2017. He said that instead of concentrating on numbers, he aims to roll out innovative products “that carry dreams and satisfy our customers.”

Hachigo was handed over a company that is in the recovery phase after former CEO Takanobu Ito stepped down to be an advisor. Ito had been criticized for multiple issues on quality and a failed worldwide sales drive to sell 6 million units of sales a year. Honda had reported a 19% decrease in operating profit for the fiscal year that ended March 31, 2015.

The automaker was hurt after it incurred higher than estimated quality costs to manage the increasing recalls of Takata airbags. Hachigo, 56 years old, is a long-time product-development engineer with lengthy overseas experience. Having worked in regions like North America, Europe and China, Hachigo has a distinct understanding of the brand’s needs in the major growth markets.

He stated that a significant part of leading the brand is his experience “on the front lines.” He believes that Honda’s recovery is hinged on managing its resources and being able to efficiently utilize its plants overseas. While Ito was the leader, the company quickly grew its global production capacity with a plan to form six regional assembly and product-development hubs despite sales failing to keep up.

Hachigo said that the result is that Honda has too much production capacity and this affects its profitability. He said that the company will make more use of its plants outside of Japan as its global export hubs.

For instance, it will be delivering the five-door Honda Civic hatchback and high performance Civic Type R to global markets from its assembly plant in England. Its plant in Canada will ship the CR-V crossover to new markets. Rather than locally sourcing the European-spec Jazz compact, these cars will be shipped from Japan.

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