By Eric Pfanner
TOKYO-- Honda Motor Co., already coping with large safety
recalls over quality glitches and faulty air bags, said on Monday
its chief executive would step down to make way for a low-profile
engineer with extensive international experience.
The Japanese auto maker said Takahiro Hachigo, a 55-year-old
managing officer based in China, will succeed Takanobu Ito, 61, as
president and CEO by June. The timing of the news conference and
the choice of Mr. Hachigo, who was promoted over more prominent
executives, were unusual for a corporate culture that frowns on
surprises.
The shift comes at a crucial juncture for Honda, which after
failing to take advantage of Toyota Motor Corp.'s stumbles in the
U.S. five years ago, now is being challenged for its top five
position in the U.S. by Nissan Motor Co. Last year, Nissan's share
of U.S. sales was 8.4%, less than a percentage point behind Honda,
and it has been gaining ground in hot-selling sport-utility
vehicles.
Honda has been hurt by stumbles in the U.S., Japan and China.
Its popular Civic sedan was redesigned for 2013 after a
year-earlier revamping received poor reviews in the U.S. for using
cheap materials and a lack of improved fuel economy. Its Japanese
sales this year were hurt by delays with the launch of a new Fit
subcompact. In China, Honda's 2014 sales were up just 4.1% in a
market that expanded by 7%, widely missing an earlier sales
forecast.
In October, Mr. Ito and other top executives took pay cuts to
show responsibility for quality problems with Honda models such as
the redesigned Fit, which dented sales. Honda also is the car maker
most affected by the recall of millions of older vehicles equipped
with air bags from Takata Corp. that have been linked to six deaths
around the world. Its vehicles account for more than half of the
about 25 million recalled for suspect air bags.
Honda has joined an auto industry group investigating what
caused the air-bags to explode with too much force. Takata has
linked the air-bag failures to hot and humid climates, but hasn't
been able to pinpoint a defect.
Mr. Hachigo pointed to his international experience, which has
included stints in the U.S., Europe and China, at a news conference
here on Monday. Little-known outside the company, Mr. Hachigo has
worked in areas including vehicle design, production and
purchasing.
"I did have wide-ranging experiences over the years, and I
believe I can make that useful for the future of Honda," Mr.
Hachigo said on Monday.
Mr. Hachigo said dealing with globalization and developing
vehicles with what he described as a more "challenging spirit"
would be his two priorities.
Analysts said Mr. Hachigo has his work cut out for him. In
addition to competitive challenges in its namesake brand, the auto
maker has largely missed the luxury car boom. Its U.S. Acura sales
last year rose just 1.5% compared with BMW's 9.8% increase and a
13.7% increase for Toyota's Lexus brand.
In January, the car maker cut its profit guidance for its fiscal
year ending in March, citing costs from the air-bag recalls. Some
of the air bags have exploded with too much force during
deployment, sending metal shrapnel into the passenger
compartment.
Honda's weak performance contrasts with that of Toyota, which
rebounded from its recall problems by focusing on quality and is
earning record profits amid sales growth and a weak yen, which
lifts the value of overseas sales when converted into the Japanese
currency.
Mr. Ito "encouraged the company to push products out more
quickly," said Jeremy Acevedo, an analyst with research firm
Edmunds.com. But in doing so, some releases such as the Honda Civic
and Acura ILX have "come up short," he added.
"Acura has been one of those brands that has had a fairly public
fall from grace," Mr. Acevedo said. Honda's new CEO "needs to
really breathe some life back into the brand."
U.S. Honda dealers say quality problems at its plant in Celaya,
Mexico, combined with delayed new-model launches, have only added
to the car maker's troubles. In October, Mr. Ito took a pay cut to
acknowledge responsibility for a series of recalls on its hybrid
Fit subcompact car sold in Japan.
"We've had some really bad issues with introductions," said one
Honda dealer.
Still, a number of initiatives spearheaded by Mr. Ito are coming
to fruition. By March 2016, the company plans to introduce a new
version of the Acura NSX sports car equipped with a hybrid
gasoline-electric engine.
"Honda is ready to make a new leap forward," said Mr. Ito. "To
do this, Honda needs to be led by a new, younger team."
Also on Monday, Honda said several directors who ranked higher
than Mr. Hachigo on the company's organization chart, including
senior managing officers Takashi Yamamoto and Yoshiharu Yamamoto,
would retire.
Honda disclosed the management changes after the Tokyo Stock
Market closed on Monday. Its shares fell in early Tokyo trading on
Tuesday, losing 1.3% to Yen3,878 ($32.61) after falling less than
1% on Monday.
Mr. Hachigo joined Honda in 1982 and worked in vehicle
development, including on a U.S. version of the company's
best-selling Odyssey minivan and its second-generation CR-V, a
popular compact sport-utility vehicle.
He was based in the U.S. from 2004 to 2006.
Mr. Ito, who took over the top job in 2009 during the depths of
the global financial crisis, steered Honda through shocks such as
Japan's 2011 earthquake and tsunami, and grew global sales by
nearly a third. He expanded Honda in emerging markets and shifted
production from Japan to overseas sites.
Yet in contrast to rivals, especially Nissan, Honda's corporate
culture has remained more inward-looking. Analysts said the
appointment of Mr. Hachigo could change that. "There's some
acknowledgment here from Honda that it plays on a global field,"
said Christopher Richter, an analyst at brokerage firm CLSA. "He
does bring a lot of attributes that could be useful for Honda right
now."
In 2012, Mr. Ito announced a target of nearly doubling Honda's
annual sales to six million vehicles by the year ending in March
2017, but recently he has backed away from that goal.
While the timing of the shift disclosed Monday was a surprise,
the length of Mr. Ito's tenure wasn't unusual. His predecessor as
president, Takeo Fukui, served for six years. Before that, Hiroyuki
Yoshino held the post for five years. Mr. Ito becomes an adviser to
Honda and will remain on the company's board.
Yoko Kubota contributed to this article.
Write to Eric Pfanner at eric.pfanner@wsj.com
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