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Honda CEO Makes It His Mission to Restore Company’s Reputation

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Photo: Stock.xchng
Photo: Stock.xchng

BUSINESS

Takahiro Hachigo, chief executive officer of Honda Motor Co., Japan’s third-largest automaker, says the company needs to focus less on deliveries and more on products.

Honda began producing vehicles in 1963, and is facing many challenges from its sales growth including lapses in quality, lack of innovative technology and stressed employees.

“I want to prioritize the development of Honda-like products rather than expanding sales volume,” Hachigo said at his first press conference since becoming CEO. “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.”

Hachigo’s predecessor, Takanobu Ito, had set the goal of 6 million deliveries annually by 2017; the goal the company has abandoned. For the fiscal year ending March 2015, the company had sold 4.4 million vehicles.

This goal meant engineers didn’t have time to develop quality products and were working overtime to meet deadlines.

Normally, it takes five years to develop new models.

Ito emphasized speed and numbers while Hachigo emphasizes communication and teamwork.

Speed was the cause of many quality-control issues. The Vezel was recalled three times and the Fit five times over the course of one year.

In October, Ito and other top executives took a pay cut as a consequence of the recalls.

Globalization also is a goal. By 2020, English will be the company’s official corporate language.

Honda will produce vehicles locally as well as ship them, pushing into emerging markets to become more competitive.

The company will start producing cars in a Nigeria factory that formerly produced motorcycles. The factory will produce 1,000 Accords annually. That number will be increased as the local market expands.

Honda has partnered with General Motor Corp. to develop hydrogen fuel cells. Honda is interested in forming other alliances that are mutually beneficial.

Not Helping Takata

Meanwhile, Honda has no plans to financially assist airbag manufacturer Takata Corp., Honda’s largest airbag supplier.

The faulty airbags explode with too much force, sending shrapnel into the passenger compartment.

There have been eight deaths linked to the problem.

Twenty million vehicles, from 10 manufacturers, have been recalled worldwide, including more than two million Hondas.

Honda has set aside funds to cover repairs this year.

The recalls have harmed Honda’s reputation with customers and investors.

Key Statistics – Honda Motor Co. Ltd. (source: MarketLine)

  • Headquartered in Tokyo, Honda is one of the world’s largest automobile and motorcycle manufacturers.
  • Operating primarily in North America, Asia, and Europe, Honda employs 198,561 and provides power products, financial services, and other products and services.
  • During the financial year ending March 2014, Honda had revenue totaling $118.4 billion, a 19.9% increase of over 2013.
  • In fiscal year 2014, operating profit was $7.5 billion, a 37.7% increase from 2013.
  • In fiscal year 2014, net profit was $5.7 billion, a 56.4% increase from 2013.

By Melina Druga for
Melina Druga is an author and freelance journalist. You can follow her on Twitter @MelinaDruga .

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