TOKYO -- Takahiro Hachigo took over as Honda Motor Co. CEO last June as the company was recovering from several body blows.
The carmaker's reputation had slumped to ho-hum, with critics less than enthused by some recent products. It was broadsided by the global recall of millions of vehicles to replace faulty Takata airbags. And a series of recalls of the redesigned Honda Fit prompted a global r&d overhaul.
But Honda is on the rebound, and the veteran engineer is pushing a back-to-basics strategy to stoke the momentum.
Hachigo, 56, spoke through an interpreter Oct. 26 with News Editor James B. Treece, Asia Editor Hans Greimel and Staff Reporter David Undercoffler about his thoughts on alliances, Acura and autonomous driving.
Q: Honda is staging a comeback with fun-to-drive cars, but it has been said that it lost its way in recent years. What happened?
A: As a result of the recession, sales went down. Because we had to stop the bleeding, we came up with various solutions. My predecessor, [CEO Takanobu] Ito, took various measures to make this happen, including the termination of some models that were under development. In parallel, we focused on six regions worldwide, including emerging markets, and tried to ensure that these businesses became more autonomous.
What role does North America play in this strategy?
North America should lead the way in building such regional autonomy. As a result, our American r&d branch started to promote and develop various models.
Even prior to that, within Honda, we had the feeling some products lacked Honda's unique originality. Therefore, we thought models developed in North America should emphasize fun features. Meanwhile, other regions -- India, China, Thailand -- were becoming capable of developing their own cars.
We started new initiatives. But it takes around three years to develop new cars. So, finally, we are now starting to see the fruits of the efforts.
Honda once envisioned global sales of 6 million by 2017. But you swore off volume goals. How important is volume?
The 6 million units was not a sales target. Instead, the initial thinking was we wanted to become a company that had that kind of scale.
The world economic situation changed unexpectedly. As a result, we could not achieve that initial sales volume. When I became president, I said rather than focus on volume, we should put top priority on delivering good products. If we do that, the volume will follow.
Is 6 million enough scale for Honda to remain independent?
In the past, there was talk that unless you achieve 4 million units globally you were not going to be able to survive. And now that the market is growing, you'd tend to think that number would be higher now. But still there are manufacturers surviving with volume around 4 million.
I don't think volume is the only benchmark by which you can judge whether a company can survive. What's more important is coming up with products that are well-accepted by the customer.
It seems Honda is growing more receptive to automotive tie-ups.
In regard to possible partnerships with other companies, it's not the case we haven't had such collaborations. For example, we have joint ventures in China. We have worked with General Motors on a number of things. And in racing we are working with McLaren.
If we see that there is an advantage in working with another company, then we would consider building such a relationship.
But no capital tie-ups?
We are not thinking of capital tie-ups.
Why are you partnering with GM on hydrogen fuel cells?
Even prior to the fuel cells, we had been talking with GM about a number of things, including engines. So we had this relationship in the past. Especially in terms of technical collaboration, we had this relationship of trust.
Wouldn't you have more trust in a Japanese partner?
It's just that we've had this very good relationship from the past with GM that we are working with them. It's not that we dislike Japanese manufacturers. If there is a good offer, we are willing to consider that as well.
What is your outlook for the U.S. market in 2016, and when do you expect demand to turn down?
This year we came out with a very challenging product in the new Civic, and we are planning other new, exciting models next year. So we are hoping sales will be even better next year.
Regarding the U.S. market outlook, one issue would be how the China economy evolves. Unless something extreme happens in China, like an extreme slowdown, I think the U.S. economy will be stable for the next few years.
What are your goals for the Acura brand?
Acura is a very important brand for the U.S. and for Honda.
Because we have tried to improve our sedans, such as the TLX and ILX, and the SUV lineup with the MDX and RDX, we are seeing a year-on-year sales increase of about 10 percent. And next year, the NSX will appear as our flagship. We think we now have a very solid foundation.
We will still continue to work on our sedan and SUV lineup so we can come up with very competitive products that make Acura stand out. We would especially like to introduce Acuras developed in North America to global markets, including China.
Does Acura need to be a global brand to succeed in the U.S.?
Our plan is to succeed in the U.S. and then try to supply the brand globally. It will be a global brand, but the success will first come from the United States.
What are your thoughts on autonomous driving?
There are still a number of hurdles that need to be overcome.
But while we pursue the fun aspects of driving, we also have to develop autonomous driving technologies. And one area where we have to focus is safety. We think it is very important to come up with technologies that compensate for human error.
But what's beyond that?
If we come up with a fully automated car, you won't have to drive the car to begin with. And it would also mean no matter what car you purchase, they would all drive the same.
We still need to discuss what direction to pursue.
You sound more conservative than others about the future of autonomous driving. Why is that?
I'm not denying the trend toward autonomous driving. We have to consider how we can come up with something original to Honda.
That is the issue we still have not solved.
I was in Los Angeles for two years with r&d, and I often went to classic car markets. You feel attachment to those classic cars. People have an emotional attachment. It's those kind of cars that we are talking about.
So even if we realize autonomous cars, we want to produce cars that elicit some kind of emotional attachment from people.
Can you give us an update on the Takata airbag recalls?
First of all, we'd like to apologize to our customers for causing such an inconvenience. What we can do at this point is to first of all increase the recall rate and to try to clarify the cause of the problem as quickly as possible. We have requested a third-party investigation.