Honda promotes American managers in push to revive U.S. market

By ALAN OHNSMAN / Bloomberg News

Honda Motor Co. was the first Asian carmaker to build autos in the U.S. and is the most dependent on the market. Now it's also putting more non-Japanese in key roles.

North American Chief Operating Officer Tetsuo Iwamura becomes executive vice president April 1 and No. 2 to President Takanobu Ito. His new seven-member board will manage activities from product planning to production to sales in North America. Three members will be U.S. natives, the first time Americans have held such responsibility, including Erik Berkman to lead regional product development and design.

"Honda quite literally has become a North American car company headquartered in Tokyo, and that's a horrible combination," Jim Hall, principal of 2953 Analytics Inc., an auto consultant in Birmingham, said in a phone interview. "When your headquarters isn't in your most important and biggest-volume market, you become disconnected. We can see that's what's been happening to them. This is to reconnect headquarters with their most important market."

While Honda's U.S. problems have been less dramatic than those of Toyota Motor Corp., which recalled millions of vehicles for unintended acceleration, they've been significant. Even before last year's earthquake and tsunami cut supplies, core Honda cars such as the Civic and Accord were losing ground to Hyundai Motor Co. and Ford Motor Co. models that won praise for stylish looks and fuel economy.

Growing competition spurred Honda to offer U.S. incentives that were 87 percent of the industry average in this year's first two months, according to Woodcliff Lake, New Jersey-based Autodata Corp. In 2008, Honda's discounts were less than half the average.

'Out of Necessity'
"For too long they've lived in this cocoon of 'What we're doing is good enough,' " said Maryann Keller, principal of a self-named consulting firm in Stamford, Conn. "There's a recognition that that's no longer the case, so I think they are making these moves out of necessity."

For the first time, Honda's No. 2 executive will be based at the company's U.S. headquarters in Torrance, Calif., instead of Tokyo.

"Knowing the current competitive and complicated marketplace, rapid changes in customer needs, we think it's better to put more emphasis on the American side," Iwamura said in a March 12 interview. "Production and R&D, development facilities, those can be done by investing money. Localization of the people is one of the key issues."

Toyota Moves
Honda's revenue from sales of autos, motorcycles and power products in North America was 986.2 billion yen ($12.7 billion) in the quarter that ended Dec. 31, or 51 percent of its global total. While U.S. sales of Honda and Acura autos fell to 1.15 million units last year, which was still 38 percent of the company's worldwide volume.

Toyota, too, is giving more authority to North American executives, to improve development of products for the market and avoid a repeat of the 2009-10 recall crisis.

This month, Toyota promoted Jim Lentz to chief executive officer of its U.S. sales unit, the first time that job has gone to an American.

Asia's largest automaker last week said Steve St. Angelo, executive vice president for North American engineering and manufacturing, will oversee regional production as part of his duties on Toyota's North American management committee. Ray Tanguay, chairman of Toyota's Canadian unit, is responsible for North American quality issues. Lentz will oversee regional sales, marketing and product planning.

Honda's Revamping
Toyota President Akio Toyoda has said shifting more responsibility to local managers in North America is central to his goal of restoring customer satisfaction hurt by the recalls.

Honda's U.S. car and light truck sales slid 6.8 percent last year after natural disasters in Japan and Thailand curbed output of parts and vehicles. The company's redesigned Civic also flopped in tests by Consumer Reports, which recommended previous versions, a sign that the carmaker's ills extended beyond 2011's one-time events.

For decades, products created for the U.S. came from a "synergy effect" between Japanese and American engineers, Iwamura said. Now, American engineers making product decisions for U.S. customers is the best way to increase competitiveness, Iwamura said.

"That is one of the reasons we appointed Erik as the top man of R&D," he said. Berkman, who begins his new job April 1, was traveling in Japan and unavailable for an interview.

Honda's Targets
John Mendel, executive vice president of U.S. sales, is also joining Berkman on Honda's North American management board, as is Tom Shoupe, president of the company's Alabama plant.

Honda wants to rebound this year with a 24 percent U.S. sales gain. It has made some progress, boosting sales 11 percent in 2012's first two months, led by a 45 percent jump in Civic deliveries. The company plans to release a modified Civic later this year to address concerns raised by Consumer Reports, as well as a redesigned Accord.

The company's U.S., Canadian and Mexican plants may also set a production volume record, building about 1.8 million vehicles this year.

The automaker is completing more than $690 million of upgrades at U.S. plants and is also building an $800 million factory in Mexico to produce subcompact models such as the Fit.

In January, Honda said it planned to build its Acura NSX "supercar" in Ohio within about two years. The racing-style coupe will sell for more than $100,000. The site and cost of that project hasn't been announced.

Restoring Reputation
Restoring its reputation as an industry innovator, a legacy of founder Soichiro Honda, is a bigger challenge than boosting sales and production.

"It's not just the Koreans; everyone has gotten better," Keller said. "In terms of quality and features, it's a game of equals. It's just a lot harder for Toyota and Honda to stand out."

It may be years before Honda's changes in local management are effective, said Hall of 2953 Analytics.

"It's safe to say that if they keep going the way they were going, they were heading for a decline with other guys passing them and just doing better than they are," he said. In the U.S., "the question is whether they've caught their problems soon enough to not get passed by Hyundai-Kia."

Source;
http://www.detroitnews.com/article/20120325/AUTO0104/203250305/1148/auto01/Honda-promotes-American-managers-push-revive-U-S-market

NY Times: Honda’s Cache, Private for Now

UNSEEN In an unmarked warehouse, American Honda has a small collection of production models and racecars that have been part of its history in the United States

The collection includes an N600, the first Honda car sold in the United States, arriving in Hawaii in 1969 and on the mainland a year later. Americans didn't warm to the tiny dimensions and wimpy 599 cc engine of the N600, but the car has still earned a place in the company's holdings.

The dream of someday being able to showcase these vehicles is at least a year or two away from becoming reality. One of the questions that American Honda officials will face at that point is which vehicles to display.
A cutaway of the Honda Insight is displayed in front of a collection of other famed Honda powerplants.

The 1999 Honda Sprocket concept is one of about a half dozen former auto show design studies on display.

A selection of Honda's early bikes is just a tip of the iceberg. Many more are stored on the other side of the rear wall.

There is also a replica of Honda's first American headquarters, which opened in 1959 in Los Angeles.

A 1997 Honda EV Plus, one of about 340 produced in the late 1990s.

Along one wall are Honda racecars from the IndyCar series.

AMERICAN HONDA does not have a corporate museum in the United States — not officially, anyway.

But there is a carefully considered collection of Hondas tucked away in a warehouse a few blocks from the company’s headquarters here.

The trove came to light several years ago when officials from the Rose Parade — Honda is a longtime sponsor of the New Year’s Day tradition in Pasadena — were invited to view a few of the more interesting models in the warehouse. A Honda executive from Japan wound up joining the tour of the collection.

Its cover was blown.

The collection was started by a former executive of American Honda, Tom Elliott, who had put aside a sampling of models important to the company’s United States history, said John Mendel.

“The problem was, we kept turning up more and more significant models that we couldn’t let go of,” said Mr. Mendel, who succeeded Mr. Elliott as American Honda’s executive vice president for sales. “We just kept parking them in this warehouse. We kept expanding the warehouse. Pretty soon, we just ran out of room.”

The collection has grown to several dozen vehicles, including Honda racecars from the IndyCar series, a selection of motorcycles and, more recently, early examples of a Honda-made generator and an outboard motor. At least that’s what Honda will admit to, although many more vehicles could be seen in storage farther back in the building when an informal lunch for journalists was held there.

While the collection is not open to the public — there is not even a sign on the building — the space is used for company meetings and events. The dream of someday being able to showcase these vehicles is at least a year or two away from becoming reality. One of the questions that American Honda officials will face at that point is which vehicles to display.

Certainly they’ll reserve a place of honor for the Honda 50, or Super Cub, a spindly motorcycle powered by a 50 cc engine. That was the first vehicle Honda marketed in the United States, soon after it incorporated in 1959 and established American headquarters on Pico Boulevard in Los Angeles. (A replica of that storefront has been created in the collection’s warehouse space.)

The Super Cub is still being produced; Honda says that 60 million Cubs have been produced, making it the best-selling vehicle of all time.

The Cub was followed by bikes like the dual-purpose 250 Scrambler, famous for tackling the Baja California peninsula of Mexico. And of course there would be a spot for the original 4-cylinder CB750, which helped establish Japan’s credibility as a maker of modern superbikes.

“A lot of people don’t remember that Honda was first a motorcycle company,” Mr. Mendel said.

“Cars didn’t come along until sometime later.”

The collection includes an N600, the first Honda car sold in the United States, arriving in Hawaii in 1969 and on the mainland a year later. Americans didn’t warm to the tiny dimensions and wimpy 599 cc engine of the N600, but the car has still earned a place in the company’s holdings.

“The N600 started it all,” Mr. Mendel said. “It was full of innovative ideas that were applied to later models.”

It wasn’t until 1973 that Honda car sales took off, when the first Civic was introduced. Since then there have been many best-sellers, as Honda has grown to become one of the world’s premier automobile manufacturers.

“It will be easy to know which of the early models to include,” Mr. Mendel said. “But there will be a lot of discussion about which of the later models should be in there.

“Everybody has a favorite,” he added. “Unfortunately, there won’t be room for all of them.”

Source;

http://www.nytimes.com/2010/01/03/automobiles/03honda.html