BEIJING -- Honda Motor Co., which has not capitalized on Toyota's recall woes and lost U.S. market share, has grown "complacent" and needs to refocus on better products and stronger marketing, President Takanobu Ito said last week.
"I'm not satisfied," Ito said of American Honda Motor Co.'s slide to a 10.1 percent share of the U.S. market in the first quarter, from 10.5 percent a year earlier. American Honda's 11 percent sales increase lagged the overall market's 16 percent advance in the period.
Ito has challenged his engineers to speed up the launch of the next-generation Honda Insight hybrid, which has been a major sales disappointment. And he is rolling out a new hybrid strategy for larger vehicles.
Marketing is also on his mind. Speaking on the sidelines of the Beijing auto show, Ito said Honda dropped the ball in selling its cars' strong points. The company also needs to do a better job of tapping rapidly changing customer preferences and must strive for lower prices, particularly to compete with hot-selling Hyundai.
"Maybe we weren't doing well in that arena," Ito said. "It's possible we grew complacent about the good performance of the Accord, Civic and CR-V."
He added: "The biggest problem is we're not selling the value of our products. We have to improve the performance of our products as well."
Ito cited the Insight as a weak link. The hybrid was pitched as a moderately priced, fuel-efficient alternative to the Toyota Prius when it was launched in March 2009. But Toyota's car nearly matches the Insight in price and exceeds it in fuel economy. This year the Prius is outselling the Insight about 5 to 1.
The Honda boss wants the next-generation Insight to best its Toyota rival in terms of fuel economy. The Prius gets 51 mpg in the city and 48 on the highway, compared with the Insight's 40/43.
Toyota Motor Sales U.S.A.'s share fell to 15.1 percent in the first quarter, from 16.3 percent in the same period last year. While Honda/Acura lost ground, Ford Motor Co., General Motors and Nissan North America managed to take a slice of Toyota's lost share.
Ito said his company's aim is to sell more and better cars, not "topple competitors." And he said Honda also won't resort to predatory incentives like Ford or GM.
"When Toyota's troubles started, the major manufacturers -- other than Honda -- came up with aggressive programs to take advantage of the vacuum left by the recalls," said Jesse Toprak, vice president of industry trends and insights for the TrueCar consulting firm in Santa Monica, Calif.
"Honda's initial reaction time was somewhat slower, which probably limited its market share gains in the last several weeks."
A key element of Ito's growth strategy is a new two-motor hybrid system for vehicles larger than the Civic. Honda's current hybrid system uses one electric motor to assist the gasoline engine and recharge the battery during braking.
The new system will have a bigger electric motor with the sole task of boosting engine power. Another motor will charge the battery, Ito said. It will go into minivans and the Acura lineup.
Ito announced at the Beijing show that Acura will launch its first hybrid model in China within three years, but he didn't give a time for a U.S. debut.
Honda's future hybrids could get a leg up through the introduction of lithium ion batteries, which are lighter and more powerful than the current generation of nickel-metal hydride packs.
Honda has a joint venture with Japan's GS Yuasa Corp., called Blue Energy Co., which plans to open its first lithium ion battery factory in Japan this fall. That plant plans annual capacity of 20,000 to 30,000 batteries for hybrid vehicles by 2012.
"Lithium ion batteries will be used in the not-so-distant future," Ito said, adding that the batteries will be introduced in new models as nickel-metal hydride batteries are phased out.
Mark Rechtin contributed to this report