Ito is laying the groundwork for North American growth
AUTOMOTIVE NEWS: You want to see more regional r&d work. When will the United States get full responsibility for developing an Accord?
TAKANOBU ITO: I don’t think it’s going to take that long. If you ask me, I would like to have the next-generation U.S. Accord developed in the United States.
TOKYO -- Honda Motor Co. President Takanobu Ito is prepping his company for growth.
He wants to boost North American sales 18 percent to 2 million vehicles in the fiscal year ending March 31, 2017.
A redesigned Honda Fit small car and new derivatives will account for the biggest increase in U.S. sales. But Ito, 59, says the Acura luxury brand also will rebound. New powertrains, including new hybrid technologies, will support the company's growth plans.
Ito, speaking through an interpreter, discussed his plans with Asia Editor Hans Greimel.
Q: What is your outlook for the U.S. market this year?
A: Earlier, we mentioned a number of 14.3 million units. But so far, we seem to be running ahead of that. We consider the United States and North American market a very solid market.
Where do you expect Honda's North American sales to be in 2016?
American Honda is planning sales of Honda and Acura combined of 1.47 million units this calendar year. We have a sales target of 6 million units in 2016. Out of that number, I'd like to see 2 million sales made in North America.
Will Honda need to add capacity?
It could be a further capacity expansion in Mexico. Or we might have to expand production capacity at other sites in North America, be it Alabama, Indiana, Ohio or Canada. What I can say for sure is that adding production of the Fit and Fit variations in Mexico is an important step in closing the difference between today's 1.47 million and the 2.0 million goal.
How many of the 200,000 Fits to be made in Mexico will go to the United States?
A vast majority would go to the United States. We are convinced if we take this Fit series to the United States they will sell.
The Fit is a key car for your growth strategy. Why do you have such high expectations for its sales in the next four years?
People in the United States, generally speaking, tend to like larger cars. But when you consider the CAFE regulations coming into effect, competitiveness will naturally shift toward relatively smaller cars.
And crude oil prices, as a general trend, will increase as well. So even in the United States, the trend will definitely emerge that people prefer cars with better fuel efficiency.
So far, because the Fit we're selling is brought in from Japan, we have had the disadvantage of the exchange rate. However, we won't have that anymore.
We will be able to provide an even more advanced package and further fuel economy enhancement without the exchange-rate disadvantage. So I believe it is going to sell very well.
In addition to that, we are going to start production of its variations at the same time. So the Fit series will definitely become a very strong product range.
What are the main improvements you want from the next-generation one-motor hybrid system that debuts on the redesigned Fit?
In addition to better fuel efficiency, we want really light-footed driving performance. Enhancement of both is the main objective. To achieve that, we completely redid the current integrated motor assist system -- not just the motor. We completely revamped the transmission and the engine. The battery has gone through a major advancement.
Will you use the new hybrid system in the Civic?
The Civic is in between the Fit and Accord, so we are still wondering about that. If we install the system from the larger cars [in the Civic], it's going to provide tremendous fuel efficiency. But if you think about value for money, it could be excessive.
I'm sure the new system from the Fit could be used for the Civic because it will have excellent performance.
But it will not perform as well as the performance it gives to the Fit. But I think that for the U.S. market, hybrid is really the technology of the future.
In the future, will you pursue more stand-alone hybrid models or rely mostly on hybrid variants of existing models?
The basic direction is to provide a hybrid among the variants. The times have changed from the era when people saw hybrids as something rare and special. I'm not saying we've given up on that road. But when we want to sell to the masses, our strategy is to add a hybrid type to an existing model.
Are you planning a next-generation hybrid-only Insight?
We don't want to just let it die out. We want to continue to give Insight some kind of symbolic meaning.
I can't promise it, but we want to continue to at least take care of the product name Insight. But if the timing is right and the technology comes together and converges into a product, that's when the name Insight is a good name.
What new investments are needed for the United States to take the lead in Accord development?
Our r&d facilities in the United States have sufficient equipment. They have sufficient manpower.
If you are talking about conventional gasoline-based internal combustion engines, transmissions and platforms, then all of those activities can be done in the United States already.
If we want to do the next generation Accord in the United States, by then we would expect that the hybrid penetration rate will have increased. So we would have to add a facility related to hybrid technology.
We need to have facilities to measure deterioration in battery performance.
That kind of expertise is really concentrated in Japan currently. So we need to take that know-how and the facilities to the United States.
What are your plans to boost Acura?
I think that's a brand where we need to improve the product attractiveness on a continual basis. Americans really have a keen eye for evaluating cars. They are connoisseurs. It's a question of how consistently and how much we have continually been emphasizing and communicating the value of the Acura brand.
How do you plan to improve the communication?
We have plans to reinforce the product lineup for Acura. First off, we're coming out with the NSX. It's full of advanced technologies that will really allow people to enjoy driving, technologies they have never experienced before.
Then we will have the RLX. It won't just be a hybrid. It will have new handling mechanisms. The current RL is a great driving sedan. But the new one is undergoing a major evolution.
Why did Honda continue with plans to open its new Yorii assembly plant in Japan next year when most manufacturers are trimming capacity at home?
For Honda to ensure its growth globally, Honda needs to have substantial sales in Japan that really show its presence here.
Also, the technology that goes into the manufacturing in Japan has to be the latest, most state-of-the-art. Our Sayama plant has been there many, many years. It has gone through renovations and improvements one after the other.
But it's gotten to a stage where it's difficult to make modifications that can deliver a big advancement.
That's why we've decided to build the Yorii plant. It will have the most advanced manufacturing technology.
You can reach Hans Greimel at email@example.com. -- Follow Hans on