Honda CEO Ito to step down after quality lapses

Editor’s note: An earlier version of this report incorrectly stated executive personnel changes at American Honda. It has been corrected.

TOKYO -- Honda Motor Co. President Takanobu Ito said he will step down and named an r&d executive with wide international experience as his replacement following a string of quality lapses that spurred a round of internal reforms.

Takahiro Hachigo, 55, currently a managing officer leading the company’s r&d, purchasing and production in China, will take office as president and CEO in late June, following approval at that month’s annual shareholders’ meeting, Honda said in a statement today.

The date of the meeting has not been announced.

Ito, 61, was tapped as CEO in 2009 and led Honda through a tumultuous period marked by the financial crisis, the 2011 Japanese earthquake-tsunami, a period of profit-eroding exchange rates and extended flooding that shut down Thailand operations.

More recently, the company has been broadsided by the global recall of millions of vehicles to replace faulty Takata airbags that have been linked to six deaths. And a string of embarrassing recalls in Japan forced Ito to delay several product launches and overhaul its r&d strategy.

Ito’s departure comes even though many of his reforms were only just underway, and Hachigo pledged to continue the strategy.

Ito’s retooling of the r&d division, for example, to slow development, add extra quality checks and reduce the onerous workload, was announced just last year. Meanwhile, the CEO’s plan to delegate power and responsibility to six global hubs for local production and r&d is also still a work in progress.

‘Going forward’

The appointment of Hachigo signals a psychological break with Honda’s stumbles and installs a leader with ample international experience in the United States, Europe and China, as Japan’s third-largest automaker increasingly moves operations overseas.

“We are going forward,” Ito said at a hastily called news conference today at the carmaker’s Tokyo headquarters. “I believe this is a good opportunity to revamp our entire operations.”

Ito said he picked Hachigo because he was a key player in setting up the six regional hubs during his time abroad. He expects the reforms to begin delivering fruit this year.

“In 2015, Honda is ready to make a huge leap forward,” Ito said. “To do this, I believe, Honda needs to overcome challenges under a new, younger leader as a team.”

The abrupt shuffle was widely unexpected partly because Ito’s reforms were just gaining traction. Some observers thought he would stay on longer to shepherd them through.

Work undone

At the same time, Ito’s six-year tenure is typical for Honda chiefs. His predecessor, Takeo Fukui, also served for six years.

“This is certainly sudden and one would have thought he’d be allowed some more time to resolve some of their issues,” said Chris Richter, an auto analyst with CLSA Asia-Pacific Markets. “Ito laid a lot of groundwork. Now that some of those assets are in place, it’s a matter of using them wisely.”

Rather than dwell on the recall problems that tarnished the end of his tenure, Ito ran down a list of major accomplishments.

They included surviving the Great Recession as one of the only automakers to avert a full-year loss, the return to Formula One racing, the revival of sports cars such as the Acura NSX, the realization of Honda’s commuter jet business and, of course, his six-pole global regionalization push.

“It’s likely Mr. Ito was planning to step down anyway, but he expected to step down with glory and success,” said Takaki Nakanishi, an auto analyst at Jefferies Japan Ltd. “Now, he’s having to take some responsibility.”

Hachigo said it was time to start reaping Ito’s reforms.

“Mr. Ito set about making major reforms,” Hachigo said. “Now in 2015, we have reached the stage were we can deliver the results of these efforts in tangible forms to our customers.”

Other shuffles

After the change, Ito will stay on the company’s board as a director and adviser. Fumihiko Ike will remain chairman.

Ito also shuffled the board and senior management.

Tetsuo Iwamura, the executive vice president who currently oversees North American operations, will step down as chairman of American Honda Motor Co. but stay on the parent company’s board. Honda will not appoint a new chairman. Instead, Takuji Yamada, who is the currently president of American Honda Motor Co., will keep his title and take over Iwamura’s duties.

The company’s current r&d chief will retire. Yoshiharu Yamamoto was president of Honda R&D Co. during a period when Honda recalled the latest-generation Fit hybrid an embarrassing five times over a 12-month period in Japan. Koichi Fukuo, the company’s newly appointed quality czar charged with fixing the problems, will be appointed new president of Honda R&D, the company said.

Separately, Yoshiyuki Matsumoto will take over as head of the company’s automobile arm. He is currently a managing officer in charge of purchasing and production for the Asia-Oceania region. Matsumoto will assume Fukuo’s role of policing internal quality.

Honda’s board will expand to 14 members after June, from 13.

Global resume

Hachigo joined Honda in 1982, beginning his career in its automobile r&d unit as a chassis design engineer, Honda said.

From 2004 to 2006, Hachigo worked in the U.S. as senior vice president of Honda R&D Americas Inc., where he helped lead localized development of Honda and Acura brand vehicles.

Before that, he spearheaded development of the first-generation U.S.-built Odyssey minivan, which was launched in 1999.

After his U.S. posting, Hachigo returned to Japan, where he worked at the global r&d center, as a purchasing executive and as a manufacturing manager the company’s Suzuka assembly plant.

In 2012 he became vice president and director of Honda Motor Europe Ltd. and was later appointed president of the company’s European r&d operations in Britain.

Hachigo shifted to China in 2013, where he has led development, purchasing, production and motor technology.

“He has the rich experience of different regions,” Ito said, “which will be indispensable as he leads Honda in the future.”

Ito, by contrast, counts a two-year stint in the United States as the only overseas posting in his 36 years with Honda. He was executive vice president of Honda R&D Americas Inc. from April 1998 until June 2000.