Honda Addresses Quality Control: Keep It Simple, Stupid
There was a time where you could ask just about anybody on the street which car brand they felt was the most reliable and they’d pause for a moment before answering — unsure as to whether they should suggest Toyota or Honda.
While the realities of what constitute a “reliable car” are a little more complicated than simple branding, both automakers deservedly made a name for themselves by undercutting and outlasting rival products coming from Detroit.
Times have changed. These days, you’ll usually see Toyota (and Lexus) sitting at the top of most reliability/quality surveys while Honda has settled uncomfortably to the middle of the pack. Perhaps more telling is the deluge of recalls that swept away some of the automaker’s credibility over the last five years. Honda is wisely blaming itself, allowing it to make the changes it believes are necessary to remedy the problem and regain some of its consistency.
Honda CEO Takahiro Hachigo has openly suggested the need for corporate reforms since 2018. According to Reuters, he has yet to take his eyes off the prize, actively working on changes to help centralize decision-making by bringing Honda’s standalone R&D division in-house while cutting a few senior management positions.
According to five Honda insiders, quality blunders have helped squeeze the operating margin at its global automotive business to [2-3 percent] — giving it less room for maneuver just as bigger rivals are building partnerships and overhauling their operations to become stronger.
That’s in stark contrast to Honda’s motorcycle business which has already brought its R&D division in-house and has a margin of 13.9 [percent].
In J.D. Power’s study of vehicle dependability in the United States, one of Honda’s two main auto markets along with China, the Japanese brand fell to 18th place this year from 5th in 2015 and 4th in 2002, its highest ranking.
“These moves we’re making today will decide our eventual fate: whether we’re going to be in business as an independent player 10 to 15 years from now,” a Honda source told Reuters.
“Quality is acting up,” one engineer said. “Honda has created too many regional models, in addition to an array of types, options and derivatives for its global models … All that’s eating up our profit.”
Back in March, Hachigo met with suppliers for a two-day meeting in Utsunomiya, Japan, asking for help in reducing Honda’s range of cars simplifying options. In May he suggested eliminating two-thirds of “derivative” products in global models by 2025 and ending Honda’s new habit of offering colors, model types, and options specific to certain regions. It’s not all that surprising or novel of a move. Ford’s CEO discussed the benefits of decontenting vehicles to free up capital last week. While the end goals are vaguely dissimilar, both automakers are basically trying to drum up cash in an attempt to put it to good use elsewhere.
Those in attendance at the supplier meeting claim Honda leadership essentially just asked for more common parts across the board. Everything from engine components to door handles.
Ultimately, Hachigo wants to save as much cash as possible, bring decision making back to Tokyo, and restore the brand’s image by reducing the number of recalls it’s forced to announce. The previously quoted engineer stated that there’s already an internal quality target in place aimed at cutting global recalls by two-thirds in the next few years. Barring another Takata incident, that seems totally reasonable.
[Image: Grisha Bruev/Shutterstock]
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