Honda CEO Steps Down, Gives Engineer Top Job

Honda is about to undergo a change in top management. Takanobu Ito is stepping down after six years as the CEO, however, his replacement isn’t a big name manager, it’s an engineer. Takahiro Hachigo has been with Honda since 1982 and the low-profile figure will be the new CEO this June, pending board approval.

Hachigo is currently in charge of procurement, research and development and purchasing for Honda in China. His official title before he becomes CEO is “Managing Officer.” Hachigo was responsible for the creation of the Honda Odyssey minivans, which debuted in the late 1990s, as well as the second generation CR-V, which came out in 2001. Ito will stay on as an advisor to Honda and a member of the board.

With this move Honda is showing their willingness to promote from within in order to try to improve an organization that has struggled recently with very public issues. Honda was at the center of the recent Takata airbag recall. Near the end of 2014, airbag supplier Takata came under fire after allegations surfaced that their airbag systems we’re to blame for at least seven deaths. Still worse were the testimonies from former employees that Takata knew about the defect 11 years ago and essentially pushed it under the rug.

The NHTSA is currently fining Takata $14,000 per per day for “non-cooperation” with its investigation. Of the 7.8 million vehicles which were recalled, over five million were from Honda. The organization has retooled their budgeting and growth strategies based on the their need to pay for recalls. The organization reportedly put aside an initial $6.5 billion to pay for the millions of recalls, and recently added over $420 million to that number. With Honda shelling out billions to pay for these recalls, they are turning to a man who they have relied upon for 35 years to lead them into what they surely hope will be a brighter tomorrow. Hachigo takes over Honda now, after Ito led the company though a few very challenging years.

In addition to the recent Takata airbag recall, Honda has recently faced some challenging times. Since 2009 the company dealt with two natural disasters, which impacted their operations in Japan and Thailand as well as the tail end of the global financial crisis. Honda lauded Ito in a press release put out today about his efforts during the past six years. He helped the organization with the, “establishment of automobile plants in Mexico, Brazil, Thailand, Indonesia, India and China.” Looking ahead, Takeshi Miyao an auto analyst with Carnorama told Bloomberg, Miyao said, “Honda just got through its worst-ever period of quality problems. They’re getting a fresh start.”

That fresh start comes at a good time. With Honda dishing out billions to pay for recalls, Nissan is upping their production and looking to catch Honda as the number two Japan-based automaker in the U.S. behind Toyota. What does the future hold for Honda? How much of a difference do you think that Ito will make at Honda? Should Honda be concerned that Nissan is ramping up their production while Honda deals with recall expenses and changes leadership?