Honda outlines new priorities as global challenges loom large

Honda is putting in place a series of initiatives to prepare itself for mobility challenges in the years ahead.

Takahiro Hachigo, CEO, outlined some of these in a recent speech in Tokyo to highlight the new business direction. While speaking of the company’s earlier drive to strengthen inter-regional coordination and its emphasis on global/regional models, it was clear that the time had now come to take a serious re-look.

At present, five global models — Civic, Accord, CR-V, Fit/Jazz and Vezel/HR-V — contribute to 60 per cent of global sales while regional models such as the N Series for Japan, Pilot for North America and Crider for China play important roles for their respective regions.

However, said Hachigo, as a result of accommodating regional needs “somewhat excessively” in each individual region, the number of models and variations at the trim and option level have increased and efficiency declined.

“So, we will undertake initiatives to further strengthen our inter-regional coordination and collaboration and evolution of vehicle development to simultaneously increase the attractiveness and efficiency of both global and regional models,” he said.

Inter-regional collaborations

As for inter-regional coordination and collaboration, Honda began reviewing and sharing the product line-up by grouping some of its six regions outside Japan. With this initiative, by 2025, the company will reduce the total number of variations at the trim and option level for global models to a third of today’s levels.

Apart from this, it will increase efficiency by “eliminating and consolidating” some similar regional models into “even more competent models” shared across multiple regions. The next topic discussed was the Honda Architecture, which will increase the efficiency of development and expand parts-sharing for mass-production models.

The first model being developed with this new method will be launched in 2020 with more to follow suit. By 2025, said Hachigo, Honda will reduce the number of manhours used for the development of mass-production models by 30 per cent. “We will repurpose those manhours to accelerate our research and development in advanced areas for the future,” he said.

The company is also strengthening its operational structure in the area of production to create strong products with high efficiency. Hachigo said steady progress was being made in optimising production capacity in all regions.

By 2022, the company expects to be producing at full capacity, up from 90 per cent in 2018. By implementing initiatives to increase production efficiency in each region, Honda is targeting a reduction of 10 per cent in global cost of production by 2025.

Hachigo said he was hopeful that with some of these initiatives, the auto-maker would ‘steadily strengthen’ the structure of its business. The CEO also dwelt on electrification where Honda has set itself a goal to electrify two-thirds of its global automobile unit sales by 2030.

From his point of view, hybrid technology was the most effective way for the company to comply with future challenges. “Therefore, we will electrify our products mainly with hybrid technologies. By increasing sales of our hybrid models all around the world, Honda will contribute to the global environment through the improvement of fuel economy,” said Hachigo.

Hybrid expansion

Consequently, the company will expand the application of its i-MMD (intelligent multi-mode drive) two-motor hybrid system to its entire line-up of vehicles. While this is compatible with mid-to-large-sized vehicles, Honda has developed a more compact i-MMD hybrid system for small vehicles. It will be adopted first by the all-new Fit scheduled to be exhibited as a world premiere at this year’s Tokyo Motor Show.

Hachigo said Honda would expand the application of i-MMD on a global basis. “With that, by 2022, we are expecting to reduce the cost of the i-MMD system by 25 per cent compared to the cost of this system in 2018,” he added.

To keep up with the rapid pace of electrification in China, Honda has begun introducing battery EV models developed together with local joint venture companies. While envisioning the introduction of battery EV models from the Honda brand, the company will continue utilising local resources in China and introduce more battery EV models in a “timely manner”.

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