The Lost Decade: Honda Exercises Hopeful Humility and Acknowledges Mistakes Made

While Honda has a long and storied automotive history, it has lost much of its luster in recent years. We won’t fault the Accord, as many of us have deemed it miraculous, nor the CR-V, which continues to gain sales momentum as the rest of the industry slows. But something definitely went wrong.

Pinpointing the first misstep is difficult, however. It might have been that we became accustomed to decades of repeated success, followed by a series of middling models that weren’t bad but showcased limited progression in the new millennium — past Civics being a prime example. Maybe it started with the sudden influx of recalls, kicked off by a reputation-crippling 11 million units equipped with Takata’s infamous and extremely dangerous airbags. Perhaps it was when Honda thought it would be a good idea to replace a simple volume knob with a touch-sensitive slider or its untenable partnership with Maroon 5 and Nick Cannon in 2013.

We could speculate endlessly. But the point is that Honda knows it screwed up somewhere along the line and has become trapped by a more stifling version of the methodology that once made it great. It’s now seeking a way out. 

“There’s no doubt we lost our mojo — our way as an engineering company that made Honda Honda,” Chief Executive Takahiro Hachigo told Reuters in an interview.

Hachigo, who joined Honda in 1982 as an engineer, witnessed the company’s return to Formula One and its sixth consecutive Manufacturers’ Championship win in 1991. But he was also around for its more recent troubles with longtime F1 partner McLaren. With no wins to its name for the current season, the team is thinking about ditching Honda as its engine supplier.

The CEO also watched Honda’s sedans progress from something that helped to redefine their respective segments in North America to safe, boring appliances of conveyance. Having taken leadership in 2015, Hachigo wants to see a return to form for the company — a culture that focuses more on innovation and risk-taking than cost-cutting and investor appeasement. He claims to have recruited a handful of engineers, managers, and product planners that share his vision and will help him realize it.

Their consensus is that Honda fell victim to Japan’s “monozukuri culture,” which literally translates into “making things.” Being preoccupied with the bottom line and production efficiencies certainly didn’t hurt the company’s finances, but Hachigo and co. have no nostalgia for the period where executives exerted so much control over research and development.

“The upshot was, as we obsessed about Toyota and beating it in the marketplace, we started to look like Toyota. We started to forget why we existed as a company to begin with,” Honda R&D President Yoshiyuki Matsumoto explained.

Takeo Fukui, Honda’s chief executive from 2003 to 2009, was the first to tighten the rains of product development. He was followed by Takanobu Ito, who further consolidated the product-design phase by moving several senior posts in the tech division to its corporate headquarters in Tokyo.

In the Reuters interviews, Honda engineer Mitsuru Horikoshi explained how this trend manifested itself in an ill-fated redesign of the Civic. “Right from the get-go, the program was about making cost savings in real terms,” Horikoshi recounted.

Ito had already decided that the ninth-generation model would reuse many components and systems from the previous generation to save on costs. Taking those factors into account, Horikoshi finished an initial draft by February 2008 and a more detailed mockup the following April. However, as unforeseen production costs arose from increased gasoline prices and a steel shortage, engineers tweaked the design to improve the car’s fuel economy.

By June of 2009, the team sought management approval for the Civic. Ito immediately told the engineers to make the car smaller and cheaper to produce — giving them only till the end of that month to complete the redesign.

“With one blow of a cost chopping knife, Ito basically told us to take our design back. It’s just unheard of. It was unprecedented,” Horikoshi said.

By the time his team finished the Civic, Horikoshi noted that they were six months behind schedule and $200 (per unit) short of their target unit cost. “I already had my pants down to my ankles — nothing more to shed,” he explained.

Another senior R&D member criticized the period as an era when Honda “lapsed deeper into a bunker mentality, and that translated into our products. It was cut, cut, cut, and it cheapened our cars.”

The end result was a Civic that didn’t receive a lot of love from the community. In addition to middling sales, the ninth-generation of the model saw the discontinuation of the Type R and an Si variant many enthusiasts saw as inferior to its predecessor. Matsumoto says that’s not what Honda wants to be known for (and may be why we saw the Type R return after Hachigo took over as CEO).

“We have to be allowed to go wild at times. If you operated a technology center only from an efficiency perspective, you’d kill the place. Which is exactly what happened at Honda. We don’t want headquarters people telling engineers what to do,” he said.

[Images: Honda]


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