So you are back in the office? Is American Honda staff doing a gradual return to the office?
Yes, but the implication of saying it's a gradual return is that at some point we may go back to the way it was, and I'm not sure that's going to be the case.
I think that we're going to have some important learnings out of the pandemic in terms of how we work, how we communicate. A lot of things that for years and years we have kind of taken as necessities of our jobs may, in fact, change as a result of this. I think a big part of the next little while is going to be an assessment of what the new reality of work life is going to look like.
As a Honda veteran, what are some of the skills you bring to your position?
I'll tell you a little story from some time ago in my career. I had spent my first 16 years at Honda in the sales division. And I got moved to parts and service in June of 2007. And I learned from that experience that there are different perspectives on the business. I had thought for 16 years that there was only one way to look at things, and that was the sales way. And when I went to work for parts and service, you get to look at things from a different perspective.
We're very fortunate at Honda because the breadth of our product offerings is so wide. And my real takeaway is that all of these different areas offer you a different perspective. When you can piece them all together, I think it allows you to make more informed decisions. You understand the ramifications for the different stakeholders. I'm hopeful that it's made me a better leader.
You're coming to American Honda at a difficult time. What are some of the challenges?
In the short term, it's all about restarting the business. With the dealers, it's how quickly can we get them back up and selling and servicing vehicles. What we're finding is that it's very regional in terms of what's happening.
Also in the short term is the production side of our business. We started up production on the week of May 11. But it's going to take a while to get that up and running. Just like the dealers, the suppliers in different parts of North America are getting up to speed at different paces. What had been a very long-term planning of four or five months out for what we're going to produce is actually turning into a week-to-week decision based on what's happening with the different areas of the business.
And then between those two, between building them and selling them at the dealer level, is the logistics activities to get the product from the factory to the dealers. That whole logistics side of things has to get up and functioning, too.
And longer term?
I am working with [American Honda President] Shinji Aoyama and the rest of our executive team on figuring out what we need to do to set Honda up for continued success into the future. If you look at Honda as a company, what that means is we need to be true to our roots. When you think about Honda as a company, you think of words like "speed," "agility," "flexibility," "simplicity" — that was our original DNA.
As we look forward, we've got to become smaller, we've got to become less bureaucratic, we've got to become less risk-averse. I think one of the learnings coming out of the pandemic is we've got to become quicker, and leaner, and unafraid to try new things.
May sales showed a strong rebound for Honda. How quickly will business return to normal?
I've read, I've looked at, I've heard all of the different shapes of the recovery curve. There's a lot of different opinions on where the market forecast is coming in. What I can tell you about Honda is that we kind of see returning to what I call normal sales and production months in July or August.
But the caveat is you have to be prepared to adjust on the fly. These are unprecedented times, and we don't want to get too far ahead of ourselves and start thinking we're out of the woods. We're spending a lot of time right now trying to understand why the May result was so good. Was it due to pent-up demand that all came to fruition in May? Was it a signal of a return — that we're coming out of the pandemic?
Separate from the pandemic, the industry is facing unprecedented change. Is Honda ready?
Let's start at 30,000 feet and work from there. Honda's 2030 vision is basically, I like to say, to make people's lives better. And yes, there are many more complexities to the business these days, and many more stakeholders that you have to consider. But as long as you keep the customer at the center of what you're trying to do, I don't think you're going to go too far wrong.
I'd like to chat about electrification for a moment. I don't think there's any doubt that the ultimate destination is zero emitting. And part of our long-term vision is to contribute to a carbon-free society. Right now, though, the issue is which path do we have to go down to get there, and how quickly do we have to go running down that path?
At Honda, our focus and our goal is to reduce CO2 emissions, not sell electric vehicles. We're the lowest-emitting, gasoline-powered fleet in North America, so we live what we preach. But I see that there is a problem out there that somewhere along the way, the lowering CO2 emissions objective has been lost, and in its place a new one has come up, which is, "How many electric vehicles can we sell?"
How about changing consumer tastes?
There's no doubt that we're in a period of significant transition. How people shop, the products they want to buy, how they want to interact with us — those things are all changing rapidly.
The important thing is that we can't adapt to those changes ourselves. In all of the communities across America, it's the dealer who is Honda or Acura to their customer. And so our relationship with our dealers has to be stronger than ever. Transparency, openness and a willingness to change are going to be required by both of us if we're going to navigate these future challenges.
Honda has a partnership with General Motors on electric and fuel cell technologies. Is that the kind of partnership that can be long term?
We do have a longstanding relationship with General Motors. And speculating on where it might go — I'm not going to do that. Our global CEO, Takahiro Hachigo, has talked about an openness to win-win partnerships in this and other areas. But right now, what we're focused on is the need to get more lower-emitting vehicles on the road. And that's done by getting older cars off the road and gradually ramping up production and sales of electrified vehicles.
So in the near term, you're going to see from us significantly increased hybrid penetration so we can reduce our CO2 footprint. We think very strongly that the path is going to be from gasoline internal combustion to the gasoline-electric hybrids and then to zero-emission vehicles.
It's a big year for Acura, with the next-generation TLX sedan and MDX three-row crossover. Is this an inflection point for the brand?
I ran Acura in Canada from 2001 to 2006, and you develop an affinity for the brand, it becomes a real part of your being. If you think back to 2001, TL and MDX had just launched; we launched the RSX that June; we had Type S [performance variants]. I think we all look back on that era and say that is what best defined "Precision Crafted Performance." Once these two new models come out — TLX and MDX — we think we're right where Acura should be. After all these years of chasing someone else's idea of what a performance luxury brand should be, we've had the courage and conviction to design and build our kind of vehicles.
Is there room for another crossover in the Honda lineup?
It's always a tempting thing to look at adding models. Our assessment right now is that strengthening the core lineup we have is what we have to focus on in the short term. I don't think we've hit the potential of our existing light-truck lineup. Our SUVs are not perceived to be as rugged as we believe they are. And so I think our focus is going to be strengthening this core group of light trucks and maximizing the potential we have there.
How are Honda's dealers after the ups and downs of the past few months?
All our dealers are open and doing some form of business — some fully open, some partially open. But there's no doubt that there has been a big impact on their business.
Any real marketing efforts that we had were really focused on retaining our Honda and Acura customers with loyalty programs, and that kind of represented the bulk of our business at the height of the pandemic. But now as business is restarting, we're putting all of our support behind the sales effort. We've got to get the business restarted, we've got to get the product on the ground moving.
Honda has been supportive of auto shows. Do you think they are still going to be important?
One of the things we need to do is take a look at all our investments and expenses. And auto shows are a big one. We've got to look at these things with a very strategic viewpoint. We need to understand why we are there. How is it helping our dealers; what do we hope to accomplish? How do we stand out from all the rest?
There are many ways to communicate, and so what specific role does an auto show play in your grand communication? That has to be very, very clear. To continue participating in auto shows because everybody else does, to keep expanding your floor space, to keep building bigger and bigger displays and then jam as many cars as you can into them — I think those days are numbered.