Reeling from recalls, Honda taps insider as new CEO
Honda Motor Co. is turning to an insider who’s spent his entire career at the company to navigate out of a global auto safety crisis, after seven people died in its cars.
Takahiro Hachigo this week becomes the eighth president of one of Japan’s most renowned companies. By replacing Takanobu Ito, whose tenure was plagued by recalls and rupturing Takata Corp. air bags, he upholds a 41-year custom of Honda presidents hand-picking their successors from within.
The steps Hachigo, 56, takes to tackle the troubles caused by its supplier will help determine whether he’s the right man for the job. His supporters say he’s a listener willing to seek consensus, traits his more autocratic predecessor lacked. Still, those attributes won’t sway detractors who want more radical change and a break from the insularity that has long characterized Japan Inc.
“Japanese electronics makers failed partly due to internally promoted top managers; I hope Honda won’t fall into the same rut,” said Kentaro Hayashi, a Tachibana Securities Co. analyst in Tokyo, who’s recommended selling Honda shares for more than a year.
Honda has relied on incremental steps, such as delaying new models and doing post-production checks to improve quality, rather than more radical changes such as severing ties with Takata. Defective Takata air bags that can deploy with too much force and spray metal at motorists have led Honda to recall about 20 million vehicles, by far the most among 11 affected carmakers. Most of those cars are still on the road, as Takata can’t make replacements fast enough.
Little known among outsiders before Honda announced his promotion in February, Hachigo will need to decide whether to maintain the relationship with Takata. The carmaker owns a 1.2 percent stake in the supplier and is its biggest customer, according to data compiled by Bloomberg.
The more than 50-year relationship has already begun to show signs of fraying. In a U.S. congressional hearing related to the air bags in December, Honda was the first carmaker to say it was turning to Takata’s rivals for some replacement parts.
“Honda will keep facing difficulties for at least the next two to three years with the new president,” said Koji Endo, analyst at Advanced Research Japan. “Quality problems are not completely solved yet, Takata is still in crisis and Honda’s business is not doing well in many markets.”