Japanese auto giant Honda (NYSE:HMC) has a new CEO -- and he's promising some big changes.
New CEO Takahiro Hachigo isn't well-known to Americans, but that could change in time. One of his first moves: Honda's official language will soon change from Japanese -- to English.
Message from the boss: Honda is a global company now
The move to make English Honda's official workplace language won't happen right away. The company plans a gradual transition to be completed by 2020.
But it's a move that's loaded with symbolism. Eighty-one percent of Honda's vehicles are now manufactured outside of Japan. And while Japan is still Honda's home base -- and the home country of most of its key executives -- just 32% of the company's roughly 200,000 global employees are Japanese. That number is expected to fall further in coming years.
Hence the message from the new boss: Honda is a global company now, and it needs to think and act like one. But Hachigo's plans for a more global Honda go far beyond language.
"I plan to create a new Honda."
Hachigo wasn't well-known outside the company before his appointment was announced earlier this year, but he was a key driver of former CEO Takanobu Ito's push to realign Honda's global operations around six regional hubs. In a series of overseas stints, he played key roles in establishing Honda's hubs in Europe and China.
Now, as CEO, Hachigo will build on that plan to confront a key challenge facing the company. For the last several years, the company has been bent on sales growth around the world. But the aggressive push left Honda with more manufacturing capacity than it needs in some parts of the world -- and it also resulted in some uncharacteristic quality stumbles. Both have hurt.
Excess production capacity is deadly to an automaker: It's a fixed cost that isn't generating revenue. Hachigo thinks that some of that capacity can be put to use by using some of those regional sites as export hubs. For example, CR-Vs built in Canada will be exported to several new markets, as will certain Civic models built in England, Hachigo said in a press conference in Tokyo earlier this month.
That should help. But more important for Honda fans, Hachigo is determined to emphasize quality over sales numbers.
I plan to create a new Honda. Rather than focusing on numbers, it is important to come up with products that carry dreams and satisfy our customers. We will focus on the development of innovative products.
It's a familiar plan, but it's also the right one
Hachigo is determined to revitalize Honda with a new series of what he calls "challenging products." The first of those, a fully redesigned Civic, with striking styling and more fuel-efficient turbocharged engines, will begin to roll out this fall.
After that will come all-new versions of the CR-V and Accord. Hachigo promises that they will be "more attractive vehicles" with "innovative designs" and plenty of advanced technology.
To make a long story short, Hachigo is determined to make the most of Honda's global scale while delivering great products. The details (and degree of urgency) differ, but it's the same kind of plan we've heard from other big-but-flawed automakers like General Motors.
It's the right formula, and it bodes well for Hachigo's tenure.