Dec 05 2014
Hondaon Tuesdaycalled on auto makers and Takata for industry-wide third-party testing of Takata air-bag inflaters, saying independent expertise would be helpful for the companies to accurately understand the problems in the inflaters, components that generate gas to fill the air bag in a crash. Ten auto makers including Honda, Toyota Motor Corp. and Chrysler have recalled a total of nearly 17 million vehicles world-wide in six years over Takata air-bag-inflater problems.Takata saidTuesdaythat it would form an independent review panel to investigate its handling of the safety defect, and that it would collaborate with other air bags and inflater suppliers to try to speed up production of replacement parts for the millions of vehicles that have been recalled.
One is a recall of nearly 10 million Honda vehicles equipped with air bags from a Japanese supplier, Takata Corp. , some of which have exploded, causing five deaths.On Wednesday, Honda and Takata face their second U.S. congressional committee hearing on the recalls, which comes after Honda acknowledged that it failed to report around 1,700 cases of deaths or injuries to U.S. regulators since 2003—eight of which were related to Takata air-bag problems. Honda has said the failures were due to problems such as coding errors and its misunderstanding of what it had to report.
Honda, Japan’s No. 3 auto maker by global sales—behind Toyota and Nissan Motor Co. —also is struggling with quality problems in a new hybrid version of its Fit subcompact car, a flagship model that is supposed to drive global growth. In October, Mr. Ito took a pay cut to acknowledge responsibility for a series of Fit recalls.“We are seriously reflecting on why we had to recall the same products so many times,” he told reporters in November at a product launch event in Tokyo. Honda representatives weren’t able to immediately comment, and declined to make Mr. Ito available for an interview.
Honda Motor Co. Chief Executive Takanobu Ito , clad in a leather biker jacket and a red helmet, roared up to the company’s Kumamoto plant in southern Japan on a red Gold Wing motorcycle last week to celebrate production of the company’s 300 millionth motorbike.
It was the image that Mr. Ito, a 61-year-old engineer, likes to project: a hands-on chief who knows the ins and outs of his products. But Mr. Ito’s tenure, now in its sixth year, has come to be defined by the problems he failed to fully grasp in time. A series of quality issues has cast doubts over the Japanese auto maker’s record for manufacturing excellence.
Facing larger rivals, Honda has always played up its technological innovation, design flair and safety of its cars. Mr. Ito, who once led development of the car body for the Acura NSX sports car—part of Honda’s luxury division—inherited that tradition and loves projects with panache. Next year, he returns Honda to Formula One racing as an engine partner for the McLaren team.
But Mr. Ito also focused on cutting costs and the product development cycle in an attempt to bulk up Honda’s presence in emerging markets after the 2008 financial crisis hit U.S. sales.
U.S. authorities separately are poised to charge its U.S. lending arm with discriminatory loan practices, Honda saidTuesday.The crises have forced Honda to hit the brakes on Mr. Ito’s plans for rapid expansion and highlighted the company’s uneasy position in the global market. It is much bigger than a niche player, yet not nearly the size of Toyota, which has overcome its own quality crisis in 2010 to post record profits and return to the global No. 1 spot.
By chasing volume, Honda “started to lose sight of what it means to be Honda,” said Takaki Nakanishi, an auto analyst who runs his own research firm in Tokyo. Its focus on offering inexpensive cars that would sell widely in emerging markets watered down the edgy brand image, he said.
While the air-bag issue has dominated the news in the U.S., Honda’s largest market, company insiders find the multiple recalls in Japan of the Fit subcompact even more worrisome in some respects. The air-bag problem mostly involves components that were manufactured by an outside supplier, years before Mr. Ito’s tenure as CEO.
His mantra, expressed in speeches and messages to employees over the last years, has been: “Delivering attractive products to customers quickly, cheaply and with low carbon emissions.”His ambition was crystallized in a target he announced in 2012: He said Honda would nearly double its annual car sales to six million vehicles by the year ending March 2017. Now Mr. Ito has signaled the target may have to take a back seat to ensuring quality. “We need to be careful with that number,” he said at the Tokyo event last month. “I have no intention of getting in the way of business development in various regions, but what’s more important is to prioritize making our customers happy.”
Since its launch in September 2013, the Fit has been recalled five times in Japan, including three recalls involving glitches in the software controlling the hybrid drivetrain. In October, a new safety executive was brought on to oversee the technical evaluation division.The multiple recalls have forced Mr. Ito to delay the introduction of new products including a fuel-cell car. Engineers are now going beyond previous simulation tests and checking for possible software defects in more real-world scenarios, people familiar with the matter said.
The problems with the Fit concern technologies developed in-house. One place where Mr. Ito’s push for speedier development made an impact was the technical-evaluation division at Honda’s R&D center in Tochigi, near Tokyo. The division is the last bastion for quality checks before a car’s mass production starts. The Fit gas-electric hybrid is loaded with new technologies, including a drivetrain that requires sophisticated software control. Even as the new model’s production deadline approached, engineers were assessing these technologies until the last minute, according to people familiar with the matter. In the end, they gave a green light, but some worries lingered, says one person working at the R&D center.
This work comes as Honda tries to get to the bottom of the problems with Takata air bags. Dozens of engineers are investigating the problem and looking for ways to boost quality, including manufacturing changes and tests of air bags in harsher temperature or humidity conditions—though nothing has been decided yet, an engineer at the R&D center said. Analysts and former executives liken Honda’s situation to that of Toyota in 2010, when President Akio Toyoda was confronted with a safety crisis involving unintended acceleration of its cars.
Mr. Toyoda, the grandson of the auto maker’s founder, had just taken over, after a rapid growth phase. He was called to testify in Congress, and later said Toyota’s problem was an excessive focus on market share and profits. The company reached a $1.2 billion settlement of a U.S. criminal investigation this year.Messrs. Toyoda and Ito are friends, encouraging each other at auto shows to make good cars, but Mr. Ito has yet to move into the limelight like Mr. Toyoda or Carlos Ghosn , Nissan’s outspoken chief.
Rick Schostek, Honda North America’s executive vice president, testified before the U.S. Senate last month and is scheduled to do so again atWednesday’sHouse hearing.
Honda’s past two chief executives didn’t go beyond six years at the helm, and if that precedent holds, Mr. Ito could be nearing the end of his tenure—though he has been mum about succession plans.
