Honda Changes The Top Man

Honda is to replace its President mid year. Back in February, Takanobu Ito announced that he would stand down after 5 years in the role. His decision came after a difficult year of recalls – some related to the Takata airbag failures and several profit warnings. To make it worse, sales have been dropping, possibly as a consequence of the recalls and quality issues that have crept in causing the cars to be recalled.

Mr Ito wanted to challenge Toyota and Nissan with a strategy of boosting output to grab market share by building new plants in Brazil, Indonesia and Thailand. The idea was to reduce the cost of each car’s manufacture and thus not only increase profit per vehicle but also the volume of cars sold globally.

One problem appears to be that the new workers may not have been trained properly or the quality of incoming parts had dropped because several recalls were necessary on a single model. Recalls cost money, no matter who was at fault and this clearly was eating in to the hoped for profits.

So the cost to fix the problems then ate into the design and launch of new models – which didn’t affect the high end models, however their bread and butter models stayed the same for too long and the competition soon grabbed extra market share. Honda’s line up started to get quite boring in comparison to refreshed models from Toyota, Nissan and Mazda and with the Korean brands catching up faster, Honda were in trouble.

Honda is a big company, they make great motorcycles as well as lawn mowers, generators, marine engines, planes (you would have seen one at the SAE 2015 World Congress at the Cobo Centre in Detroit this week) and even the funky ASIMO humanoid robot. None of the other divisions could cover the problems with the car side of the business so Mr Ito felt it was time to go – he joined back in 1978 and worked his way up to the President of the Board in 2010.

He will be replaced by Takahiro Hachigo who joined in 1982 and has served in many roles in many countries for Honda, so his international experience will be invaluable. He is currently based in China until June when he will return to HQ in Tokyo.