Paul Tan's Automotive News

Contrary to what other industry leaders are saying regarding the world economic situation, the worst is not over yet. That is the opinion of Takanobu Ito, the new President and CEO of Honda Motor Co, shared with the Malaysian media during an interview earlier today at the 2009 Tokyo Motorshow. It was quite an interesting interview as he had just taken over Takeo Fukui who has been the big boss for 6 years.

According to Ito-san, so far the situation has subsided enough to the point that financial institutions can begin getting back onto their feet again and start issuing credit, but this optimism does not follow through down to the grassroots where the actual customers are.

Ito says Honda is in the business of selling cars and when you look at actual customers, the economy is not yet at a point where customers have regained their appetites for making purchases. This is because they do not feel secure or rather are not confident enough that they have the disposable income to make a big purchase like a car, yet. This applies not only with the US market but to other markets such as Europe as well.

But Ito expects certain markets to continue to show growth such as the Asian market and that includes us in the ASEAN region. For now, Ito’s biggest challenge is to ensure that Honda continues to remain relevant in the global automotive scene. Ito is from an engineering background, specializing in chassis design. He was the Large Project Leader (LPL) for the Honda NSX.

Ito says Honda has to continue to develop enticing products and new technology to keep the Honda brand in people’s minds. In fact, it has to be so to keep people interested in cars altogether – apparently in Japan the young Japanese are starting to lose interest in cars thanks to their extremely efficient and usable public transportation system.A select but alarmingly growing few feel cars are no cool to own – they prefer the latest handphones or gadgets.

But new products are just one part of the picture. Ito has to revamp the company’s very financial foundation to ensure that even in times of reduces sales volume, the company can still make a bit of profit – not just breaking even or dipping down into the red.

Ito stressed that this has to be done as soon as possible, and it has to be done without compromising things like its Fundamental Technology Research Centre (held under Honda R&D Co Ltd) which employs 700 people who work on random pieces of advanced technology such as the ASIMO robot, the Honda Jet, and even things like nanotechnology and brain-machine interface systems. But of course as consumers I think we’d appreciate things like R&D to develop a 7-speed automatic that can be equipped at the cost of a 4-speed!

The first thing that was chopped is their F1 program (which has since evolved into the successful Brawn GP) and Ito regrets that the move was inevitable. Encouraging its engineers to have out-of-the-box thinking and develop breakthrough ideas are more important than racing a really fast single seater around racetracks.

Honda’s Tokyo 2009 exhibits also included a mix of alternative fuel vehicles. We have the hybrids of course and the Honda FCX Clarity fuel cell car which has started to become familiar to us, but Honda also exhibited a few new zero emissions electric (battery-powered) products such as the Honda EV-N Concept, a retro-styled compact city car that looks like a tribute to the Honda N360.

Does this mean Honda has shifted its focus to EVs instead of FCVs? Ito says no – Honda’s product strategy does not assume the fact that EV is the set way of future automobile propulsion. Ito says EVs are not the solution to everything, and will remain far from so in the future if battery technology does not improve.

In fact, these alternative fuel vehicles are currently so costly that they may really never make their way full-scale in poorer third world countries such as most of the ASEAN region, with the exception of perhaps Singapore. A cheaper way to make a difference would be to make more fuel efficient engines and reduce vehicle weight so that power to weight ratio improves, and when power needs reduce, fuel consumption will reduce.

Finally we asked Ito-san: What kind of company is Honda right now? With it quitting F1 and scrapping its new NSX program, the company seems to be distant from its past identity that consisted of cars such as the Honda NSX, the Honda Integra, and etc. With the cancellation of the NSX, Honda is pretty much left without a flagship model, and I think the closest that Honda has to something like a flagship now is the FCX Clarity which is a very large fuel cell hatchback. Yes, see what I mean?

Having been heavily involved in the old NSX, Ito says he of course would be very happy to have another car like the NSX like the flagship but Honda has to find a way to do it while remaining relevant to current environmental and economic issues first.

But if he were to dream up what a new Honda flagship would be like – it would be much like the old NSX with a very lightweight body, but powered by powerful motors fed energy by hydrogen fuel cells instead of the NSX’s petrol-powered VTEC V6. But that’s not going to happen for the moment – it looks like funds are being used quite conservatively. Honda expects to post a US$111 million operating loss for its first half earnings this fiscal year, which is already better than expected as the effect of the weak dollar versus strong yen (91 yen to a dollar) was cushioned by the China market which is doing well, as well as sales in Japan.