TAKANOBU ITO, CEO, HONDA MOTOR CO.

Honda aims for record sales, return to its sporty roots

Automotive News: Will you reintroduce sports cars along the lines of the S2000 or the Integra? Or R-Type variants?
Takanobu Ito: What's more important is to give a more sporty flavor to our current lineup. To that end, we are continuing to develop [dual-clutch transmissions]. And we are trying to come up with a more powerful engine lineup. We want to enhance the degree of sportiness within the current lineup.
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TOKYO -- Honda Motor Co. CEO Takanobu Ito has positioned the company for a big increase in sales and a return to its performance engineering roots.

Ito expects U.S. sales volume to set a record this year and climb higher next year on the back of new product.

An assembly plant in Celaya, Mexico, that opens next spring will deliver the redesigned Honda Fit hatchback as well as a Fit-based compact crossover, a new entry for Honda.

Meanwhile, Ito says Honda will introduce a new line of direct-injection, downsized turbocharged engines that will provide better performance and improved fuel economy. Add to that a sportier eight-speed dual clutch transmission.

Ito, 60, spoke through an interpreter with Asia Editor Hans Greimel about the expansion of Honda's manufacturing footprint, plans for new technology and the positioning of the Acura brand.

Q: You predict record U.S. sales this year. What is the outlook for next year?

A: This year, we believe we can achieve record sales. The best so far has been 1.55 million, and we will definitely exceed that. And from next year, we want to grow that further, of course.

What about the risk of overcapacity as carmakers expand or build plants?

Many car manufacturers are advancing into Mexico. We're building a new factory there ourselves. Mexico has big potential as a production site, which is key for all automakers.

A lot of production volume is coming from Mexico. But if you ask me whether I consider overcapacity a risk, I don't consider it a risk. This is just one of the conditions that is a natural outgrowth of competition.

One thing that is significant about the Mexican plant is that it will produce entry-level cars that have not been produced in North America so far. Those two models [the Fit hatchback and Fit-based compact crossover] will be very helpful in North America, being the driving force behind growth there.

The plant has a capacity of 200,000. What will be the breakdown in output between the models?

About half and half, with the SUV maybe being slightly more.

That represents a huge sales jump. Is U.S. demand for subcompacts really that high?

Because we were exporting the Fit from Japan, there was a limit to the number that could be sold. There was an additional cost factor, with export-import procedures as well as a time lag between sales and production planning. That was a handicap compared with other models such as the Civic or Accord.

Now, because Mexico is nearby, we offer these cars at a very reasonable price and in a very timely manner. In that environment, of course, we think Fit hatchback sales can grow.

But the bigger factor is the SUV. It's less expensive than the CR-V but very attractive and full of new functions. That will lead to a growth in volume.

Are you planning to export from Mexico to other regions, such as Europe and Japan, to take advantage of its free-trade pacts?

The biggest factor is that Mexico is adjacent to the United States so it's a good location. But another important factor is that Mexico has free-trade agreements with many regions, and we are able to ship there as well.

We have secured a huge tract of land for our production site there. That tells you what our ambitions are.

How much more could you expand there? Can you double capacity?

We could double the size if we wanted. We don't plan to, but we have the land, that flexibility.

You want 2 million North American sales by 2016. This year you should reach nearly 1.8 million. Simply by adding the Mexico plant, you could reach 2 million. Is the goal too low?

My biggest challenge is trying to grow Honda globally in a well-balanced manner.

We are asking all the regions to manage their own operations. But so far, we have not been able to deliver cars in a timely manner that truly meet the differing needs of customers in the various regions.

So I'm trying to get to a stage where it's not just Japan that is exporting products to other regions. Each region should be providing products to other regions.

I want the U.S. to contribute or share its good capabilities and success with other regions through exporting their products to other regions.

Particularly with large vehicles, such as the Accord, MDX or Pilot, vehicles we don't produce in Japan -- I'll be asking the United States to provide a stable supply of those vehicles to other parts of the world where there is demand for them.

Do you have targets for exports?

There is no precise figure. But ideally if the regional production capacity is 100 percent, then 70 percent to 80 percent should be sold in the local market, and the rest should be supplied to other regions.

So ideally, maybe for the U.S., from its production capacity, I would like them to contribute about 20 percent of their production capacity to other regions.

I believe the U.S. can contribute more to other regions.

How far will you go in shifting your lineup to continuously variable transmissions?

For our Earth Dreams lineup, CVT is definitely a key technology.

We were able to deliver very good results by incorporating it into the new Accord this time.

Of course, it achieves great fuel efficiency but at the same time, it provides a very exhilarating driving feel.

But don't CVTs sacrifice performance for fuel economy?

Customers have different needs, but one thing we have to remember is that, particularly in the United States, a car is a necessary tool of everyday life. A lot of customers there are focused on a car that is stress-free and fun to drive.

In that sense, the CVT is something we're very proud of.

What other technologies are you considering?

At the same time, Honda is working on and further maturing the development of dual-clutch transmission technology as well. One outcome of that is the DCT's use in the Fit hybrid.

We want to gear the DCT system toward people who really love more sporty driving. That's the ambition here. The DCT has a great sporty feeling. The gears shift bam-bam-bam.

But does the majority of customers really want the rpms to rev up so quickly all the time?

Our advantage is we have many types of technologies that can cater to both kinds of customers: those who want real sports driving and those who want just sporty, everyday driving.

What is the new direction in engines?

We are focusing a lot on downsized turbo technology. For example, 1.0-liter, 1.5-liter and 2.0-liters. We will mount these turbocharged engine prototypes on vehicles and show them.

Will these be considered Type R?

We are not using this downsized turbo just for the sake of making a Type R. We want to make the entire lineup more fun, while also improving fuel efficiency.

If we tune it at the top end, we could make it an R Type or an Si. But whether we call it that or not is something we haven't announced yet.

The German brands are moving downscale. Is that crowding Acura's market space?

For us, it is a good thing that the European brands are lowering their prices because that means they are getting closer to a level playing field with Acura. That is when we can compete head-to-head and make an appeal with our technology, driving performance and feel.

When we are compared side-by-side, our uniqueness and superiority can become more apparent.

You can reach Hans Greimel at hgreimel@crain.com. -- Follow Hans on Twitter


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