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Customer LoginsSame-Day Analysis: Honda chief reveals future strategy, expects alternative-powertrain vehicles to account for two-thirds of global sales by 2030
Honda president and CEO Takahiro Hachigo has shared his vision for the company, focusing on more integrated global operations, streamlined research and development processes, and the development of alternative powertrains.
IHS Automotive Perspective
- Significance: Honda president and CEO Takahiro Hachigo today (24 February) revealed his vision for the company and set out two key themes: the advancement of the automaker's six-region global operational structure; and the development of challenging products unique to Honda.
- Implications: Under the new strategy, the automaker will strive to strengthen its global production capabilities by establishing complementary production bases, utilising global models, and strengthening production and sales of regional models in markets. Hachigo has also set an ambitious electrification goal, calling for two-thirds of Honda's global sales to be derived from green vehicles such as hybrids, plug-in hybrids, fuel-cell vehicles, and electric vehicles by 2030.
- Outlook: With the new strategy, Hachigo, who is still battling quality problems at Honda after nearly a year in office, is looking to kick-start the introduction of delayed model launches and establish the company's global production footprint.
Honda president and CEO Takahiro Hachigo today (24 February) revealed the company's long-term vision and environmental strategy at a press conference in Tokyo (Japan). According to a company press release, Honda has set out its goals under two broad themes: the advancement of the company's six-region global operational structure (Asia, Japan, China, South America, North America, and Europe/Middle East/Africa); and the development of challenging products unique to Honda. As part of the first theme, Honda aims to strengthen its global vehicle production systems and capabilities by creating complementary production bases. Europe will serve as the export hub for the new-generation Civic hatchback that will make its debut at next week's Geneva Motor Show in Switzerland, shipping the vehicle to North America and other overseas locations. Meanwhile, Japan will serve as the base for providing support for production/supply to overseas locations and may begin shipping the Civic and CR-V to North America and the HR-V and CR-V to Europe. Canada, which currently exports the CR-V to Europe, will cease those exports and target production at North America. Furthermore, the company aims to achieve a domestic annual production capacity of nearly 950,000 units, as a long-term goal. To meet regional demand, the automaker plans to expand its Chinese production while introducing new sport utility vehicles (SUVs), and it will add production of the Acura MDX at the East Liberty Auto Plant in Ohio (United States) to cater to high demand.
Notably, Honda will also strive to create a clear demarcation between the development of vehicles and other operations such as production, sales, purchasing, quality, and service. The automaker will add new roles in charge of product development, conducting evaluations from the standpoint of the entire vehicle consistently for all models, and supervising design creation for Honda and Acura models on a global basis. With these changes, the company aims to realise a development structure to further highlight the unique characteristics of Honda.
Honda will direct its focus towards the introduction of new environmentally friendly vehicles. "We want to focus our development resources for electrification," Hachigo said. The automaker will work towards the advancement of downsized turbo engines and will specifically focus on development of plug-in hybrids as part of its strategy. By 2018, a new plug-in hybrid model will be launched in North America, followed by plug-in hybrid variants of existing key models. Moreover, by 2020, the automaker will launch a next-generation fuel-cell system, jointly developed with General Motors. To this end, the automaker expects plug-in hybrid/hybrid vehicles and zero-emission vehicles such as fuel-cell vehicles (FCVs) and battery electric vehicles (EVs) to account for two-thirds of its total global unit sales by around 2030. Of these sales, plug-in hybrids and gasoline (petrol)-electric hybrids are expected to account for about half of Honda's overall sales, while FCVs and EVs could account for about 15%.
Outlook and implications
Just one year after being appointed as the new president and CEO of Honda, Hachigo has carried out a number of significant changes in the organisation. Honda has been facing huge challenges on the quality front, which have carried over into Hachigo's tenure, and has issued several recalls. In addition, Honda has been hit by the recall crisis globally due to potentially defective airbags supplied by Takata. The massive recalls have resulted in delays to the introduction of several products and the scrapping of Honda's goal to sell 6 million vehicles annually by 2017. To address these issues, the automaker announced plans in early 2015 to streamline its product offerings over the next few years and to prune the number of model variations. The company also announced plans to invest more time in product development to avoid any future quality lapses rather than chasing sales numbers.
The new strategy, taking previous measures a step further, will serve as a revival programme to launch innovative and distinctive models. By streamlining research and development (R&D), Honda expects to improve product development. Hachigo's predecessor, Takanobu Ito, introduced a global network of six regional production and product development hubs, but this move overburdened support activities from Japan. Hachigo has decided to keep the system in place but with clearly demarcated responsibilities. Furthermore, Honda's decision to establish complementary production bases comes as the company attempts to utilise extra capacity in locations such as Japan and Europe by having them ship cars to other overseas markets.
The latest announcement follows changes to the management team revealed yesterday (23 February) by Honda. Underlining a similar commitment to reduce global warming and pollution, Honda's compatriot Toyota recently announced ambitious plans to reduce carbon dioxide (CO2) emissions from its new vehicles by 90% by 2050.
About this article
The above article is from IHS Automotive Same-Day Analysis of automotive news, events and trends, and is a deliverable of the World Markets Automotive Service. The service averages thirty stories per day and also provides competitor and country intelligence. Get a free trial.