Glitches fuel soul searching at Honda

The hybrid versions of the hatchback and its crossover variant, sold in Japan as the Vezel, were plagued with drivetrain problems, blamed on rushing a complicated, new system to market.

Honda's breather from the breakneck development pace echoes that taken by rival Toyota Motor Corp. after its 2010 unintended acceleration crisis. Toyota slowed product development as a response, in a back-to-basics move to better root out glitches.

At Honda, global r&d chief Yoshiharu Yamamoto thinks similarly.

He wants to trim the number of vehicle variants in Honda's global lineup by 20 percent to free more time for each product.

He offered no timeline or further details.

But he criticized Honda's workaholic mindset, suggesting that the r&d team needs to develop a culture of leaving the office by 7 p.m. at the latest. The pressure-driven grind, he says, leaves little time for creative thinking and cultivates tunnel vision.

"If you think something's wrong but follow the flow by saying it's OK because the logic and routine are OK, that's when errors pop up," Yamamoto said. "It's important to think clearly."

Ito shook things up in October with the unprecedented step of appointing a quality czar to clamp down on problems.

Honda's top executives also took pay cuts for three months to take responsibility for the recall-plagued Fit.

Honda's reputation for bulletproof quality was further dented by recalls of millions of older vehicles to fix faulty Takata airbags. But it was the embarrassing Fit glitches, linked to internal lapses, that spurred the soul searching.

 Dubbing himself "Mr. Quality," Senior Managing Officer Koichi Fukuo began reviewing development companywide on Nov. 1 as Honda's newly appointed quality chief.

But even before then, Ito revised global r&d to use a prototype earlier in research to test how independently developed parts work together in a vehicle. Before, Honda never pulled the components together until after research was done and development was under way.

"At a glance, it looked like efficiency was improving, but reality was different," Fukuo said of the old development method. "This time, we had five recalls. That is very bad efficiency."

The changes will increase the cost and time of developing vehicles at Honda, just two years after Ito implemented a sweeping overhaul of product development aimed at speeding localization and better tailoring vehicles to local markets.

But Fukuo said Honda is ready to sacrifice sales targets in some markets if it means building better cars. "We need to straighten our collars and reduce the burden," he said.

The review also covers Honda's expansive North American r&d operations in Ohio. But Fukuo said it hasn't forced U.S. product delays because no vehicle was at a critical rollout juncture.

Ito, who developed the aluminum body for the first-generation Acura NSX and has a penchant for driving his motorcycle to work, has made thinking outside the box a hallmark of his tenure.

"He has put a lot of changes into place," said Kurt Sanger, an auto analyst with Deutsche Securities Japan. "In my opinion, Ito's mistake was just trying to go too fast."

Taking the helm in 2009 at the height of the global financial crisis, he inherited a company with costs stripped to the bone. The V-8 Acura program was killed, as were plans for a follow-up NSX. The Formula One team was sold, while Honda canceled plans to build a minicar factory and delayed plans to open another plant.

Yet, Ito operated on a shoestring budget, making Honda one of the few carmakers to eke out full-year profits through the recession.

Ito began breaking down the company's traditional supplier network, in partial recognition that the medium-sized carmaker just didn't have the budget to pursue as many in-house programs.

Then, the yen's dramatic appreciation against the dollar spurred Ito to radically decentralize Honda's production and r&d operations to six global hubs, a work still in progress.

Japan's 2011 earthquake-tsunami only hastened Ito's push to broaden the supplier base and move offshore. And by 2012, Honda was back in growth mode with Ito eyeing sales of 6 million.

"The result was it pushed us over our capacity," Fukuo said.

The Fit's rocky launch belied the first kinks in the system.

Rather than developing the entire drivetrain independently, Honda sourced the innovative hybrid's dual-clutch transmission from German supplier Schaeffler Technologies AG. Integrating the outside design proved more challenging than expected.

Now, five recalls later, Honda is reinventing once again.