TOKYO (TIP): Honda Motor Co hurt by falling sales and embroiled in a crisis over defective air bags is replacing its CEO.
The Japanese automaker said on Tuesday that Takanobu Ito, its president and chief executive officer since 2009, will step aside in June and be succeeded by longtime executive Takahiro Hachigo.
The unexpected decision follows the recalls of more 6.2 million Honda vehicles in the US and millions of others elsewhere equipped with air bags made by Japan‘s Takata Corp.
The air bags have inflators that can explode, expelling shards of metal and plastic. At least six deaths and 64 injuries have been linked to the problem worldwide.
At a press conference the 61-year-old Ito said it was his own decision to step down. He has been at Honda since 1978, when he joined the company as a chassis engineer.
“I believe Honda needs to become one strong team in order to overcome challenges and the team requires a new, youthful leadership,” Ito said, according to a transcript provided by Honda. Hachigo is 55.
Other automakers use the Takata air bags, but Honda has the most exposure and is spending heavily on the recalls. The company has lowered its full-year profit forecast to $4.6 billion from $4.8 billion.
Honda is also facing civil penalties and lawsuits over the issue. In January, the US fined the company $70 million, which was the largest civil penalty levied against an automaker, for not reporting to regulators some 1,729 complaints that its vehicles caused deaths and injuries and for not reporting warranty claims.
Amid the crisis, Honda lowered its global vehicle sales forecast for the full year to 4.45 million vehicles from 4.6 million. Its US sales grew just one per cent last year as plummeting gas prices hurt demand for its lineup of small cars such as the Civic.
Earlier this month, Ito scrapped Honda’s goal of selling 6 million vehicles per year by 2017, saying the company needed to focus on quality instead of on sales targets.
Stephanie Brinley, a senior analyst with IHS Automotive, said Ito’s six-year tenure as Honda’s chief is in line with Honda’s past three CEOs.
Ito’s tenure was largely a successful one, Brinley said. Between 2009 and 2014, Honda’s global sales grew 28.5 per cent. He encouraged a focus on sportier cars, like the upcoming Acura NSX, and returned Honda to Formula 1 racing. He also expanded Honda’s global manufacturing footprint with new plants in Mexico, Brazil, Thailand, Indonesia, India and China.