Honda Tries to Figure out how to Remove Teh Suck

[Swallow Doretti]

http://www.autonews.com/apps/pbcs.dl...120309953/1489

The future of Honda Motor Co. may rest with a pair of contrarian Japanese car engineers working from a drab Tokyo suburb with a hotline to the boardroom.

Their mission: just say no.

Honda's creative directors Toshinobu Minami and Yoshinori Asahi are out to kill any mediocre car designs rumbling down the pipeline. In short, they have been told to stop anything like the 2012 Civic, a cheapened redesign that prompted critics, consumers and rivals to wonder how Honda had so badly lost its way.

Inside Honda, in both Japan and the United States, that same question has also been asked with urgency. Honda, many say, slipped into designing cars by committee in recent years and drifted away from the iconoclastic ambitions of its founder.

Honda had become boring.

"Somewhere along the way, we lost the ability to express ourselves more freely," Asahi told Reuters. "We have a lot of designers here, and when we ask ourselves, 'Which Honda car would we want to buy?' Sometimes, some of us draw a blank."

That's a startling admission at a company long praised for the quality and durability of its vehicles -- a company that caught U.S. automakers flat-footed in the 1970s with inexpensive, fuel-efficient cars like the original Civic.

Touted four decades ago for its CVCC engine that boasted cleaner tailpipe emissions -- as well as inspiring the Civic name -- Honda has trailed with advances such as six-speed transmissions and direct fuel-injection systems.

In recent years, Honda's "car guys," the engineers that built the automotive upstart into a powerhouse, were overshadowed by the "bean counters," financial executives more willing to cut corners on vehicle content to shore up margins, insiders say.

That approach looks good on a spreadsheet, but it also carries the risk of a backlash. Consumers can turn on a debased version of a popular car and the resulting publicity can burn a brand -- a lesson GM, Ford and Chrysler all learned the hard way in the slide to crisis in 2008.

Ironically, Detroit's willingness to settle for also-ran status in small-car quality created the opening for Honda in the 1970s and 1980s. Now, analysts and industry executives wonder whether Honda can rekindle the underdog ambition of founder Soichiro Honda.

Rapid changes

Changes at Honda can't come soon enough after a terrible year. Slow to recover from the earthquake and tsunami in Japan a year ago, Honda's U.S. sales tumbled 7 percent in 2011. By contrast, Nissan bounced back with a 14 percent sales gain to almost match Honda's market share.

Nissan, in particular, has made it a mission to overtake Honda in the United States and has closed the gap since 2010.

Meanwhile, Hyundai Motor Co. and its affiliate Kia Motors Corp. have overtaken Japanese automakers as the benchmark for value-for-money. The Koreans have also taken advantage of a favorable exchange rate to install pricier fuel-saving technologies and other extras while Japanese brands struggle to offset the debilitating impact of a strong yen.

"Honda somehow managed to get very, very far away from their engineering discipline," AutoTrends Consulting President Joseph Phillippi said, adding it could take three years for Honda to show it has turned the corner in car development.

A financial rebound could come quicker, though. Honda has not given detailed forecasts for the fiscal year starting April, but executives see U.S. sales up by as much as 25 percent in 2012.

Honda's earnings remain supported by a strong finance arm and its leading motorcycle business. In addition, the automaker is taking steps to shift more production to North America to shore up profitability.

In another move that shows the importance Honda attaches to getting it right in the United States, the board last month promoted North America chief Tetsuo Iwamura to become the No. 2 global executive, the first time that job has been based outside Japan.

But behind the scenes, the battle for Honda's automotive soul is being played out in places like Asahi and Minami's sprawling third-floor studio in the Tokyo suburb of Wako. If the upscale Aoyama neighborhood that houses Honda's headquarters can be likened to New York's Fifth Avenue, then Wako would be a dreary town in New Jersey.

Since September, when they were promoted to fix Honda's car designs, Asahi, 47, and Minami, 44, have been working from Wako with a mission to shake things up. Both worked in the early 1990s on the fourth-generation Accord, a bigger Honda that won praise for its simplicity and a near-indestructible four-cylinder engine.

"He hates doing what he's told to do," Asahi says of his partner with approval. "Just like me."

Minami says it's a struggle to get Honda's designers to shed a conservatism born of the consensus-building approach typical of Japanese corporate culture.

"I want designers to be heard at the company, but for that I need them to stop playing nice and compete more fiercely with each other," he said.

Out of favor

"Playing nice" has already taken a toll on Honda.

Last summer, Consumer Reports magazine savaged the redesigned Civic for a low-quality interior and choppy ride. It dropped the car from its recommended list and ranked it next to last among 12 compact sedans tested. It was the first time the Civic had failed to make the list since the buyer's guide was launched in 1993. As a brand, Honda lost its coveted top spot in the magazine's annual report on quality this week.

"(It was as if they said) 'OK, we've got the marketplace. We're going to put in cheap interiors. We're not going to keep up with engine technology," said David Champion, senior director at Consumer Reports' auto test center.

Honda executives realize their mistakes.

"We should have been more aggressive," said Honda's top engineer, Yoshiharu Yamamoto. "The Civic is a cornerstone. And to have that car get the feedback that it did, we have to take that to heart."

John Mendel, Honda's U.S. sales chief, has argued fallout from Consumer Reports' poor review has been minimal, pointing to the Civic's segment-leading sales in recent months. For the first two months of 2012, Civic's U.S. sales were up 45 percent.

But industry research firm TrueCar.com says incentives on the Civic have more than quintupled since its debut last April to almost $1,900 per car in January, suggesting sales are being driven by attractive deals.

Mendel acknowledges Honda cut costs on the Civic interior because it believed back in 2008 that consumers would want a cheaper small car at a time when the economy was sliding into a deep recession. Instead, rivals including Hyundai, Ford and GM all found American consumers ready to spend more for small cars with richer interiors, quality sound systems and extras like navigation and heated seats.

"We missed a trend," Mendel said. "We zigged, the market zagged a little bit. We did some things that we thought were less important to the consumers."

Honda is rushing a redesigned Civic to market late this year, essentially a facelift to protect the image of a car that is key to both Honda's future and heritage.

The Civic is the model that famously put the then little-known Japanese automaker on the map in 1972. With a base price of around $12,000 in today's prices and a slogan that emphasized its no-nonsense engineering -- "It will get you where you're going" -- the Civic was a hit with Americans looking for a fuel-sipping small car in the wake of the first oil price spike.

The Civic now accounts for one of every five of the three million-plus cars Honda sells worldwide.

"They erred by taking the content out of the vehicle," said Mike Shaw, who owns Honda dealerships in Texas and Louisiana. "The bean counters probably did take over. They now have been overruled. That's an encouraging sign."

Industry observers and insiders said Civic's large U.S. following -- 9 million sold -- tempted Honda to stick with a design that wouldn't alienate repeat buyers.

Missing 'Mr. Thunder'

Honda has always thought of itself as an engineering firm -- its formal name in Japanese translates to Honda Technology Research Industry -- and its CEO has always been an engineer.

To avoid boring redesigns, Honda has had a long-standing policy of not letting engineers lead development of the same model twice. The idea was to encourage project leaders to "compete" with the previous version.

"The structure was there, but maybe not the culture behind it," Minami said. "None of us, including top management, has ever worked with Soichiro Honda. It's a totally new generation."

During his reign, engineers lived in fear of Soichiro Honda's surprise visits, which typically ended in deafening rants against mediocrity that earned him the moniker "Mr Thunder."

He retired in 1983 and died nine years later. Many outside Honda say the company could really benefit from the aggressive drive he championed.

"Soichiro Honda was definitely the opposite of a bean counter; he was like the automotive Steve Jobs," said Bob Lutz, a former GM vice-chairman and one of the industry's best-known "car guys," referring to Apple's late visionary leader.

"He was always for technical progress and 'Don't tell me it's too expensive'," said Lutz, speculating Honda engineers no longer had the founder's voice ringing in their ears. "If they did, they would definitely have better technology and better styling. They've just lost it."

'Behind the screen'

Honda executives want to shatter that view. Yamamoto, the r&d chief, has a message for designers: worry less about what other departments may want. "I want them to work more freely."

In the past, Honda designers didn't need permission to veer off script.

They often banded together to work in secret on an alternative version of a car when unhappy with the approved blueprint. Going "behind the screen," as it was called, often had the tacit backing of managers who felt it upheld the spirit of Soichiro Honda.

Asahi knows the power of going "behind the screen" first-hand. In the late 1990s, he began dreaming of an open-top sports car for Honda and spent his days drawing out models even though he was assigned to focus on car interiors. A rushed clay model that he developed with a group of like-minded designers outside work hours became the prototype for the S2000, a zippy roadster launched in 1999.

"I've personally seen a lot of these dreams become a reality at this company," Asahi said. "That's why under the new Honda, I want to draw out the guys who have that kind of passion and make cars that way."

Honda's creative duo now have a direct line to CEO Takanobu Ito. Frustrated with the pace of decision-making at Honda, Ito has put himself in charge of Honda's car operations, splitting the core of the company into three units headed by engineers: the Acura premium brand, mid-sized vehicles and small cars.

Analysts say the first true test for the "new" Honda will come with the redesigned Accord due later this year. The Accord is Honda's best-selling vehicle and previous generations made the Japanese automaker's reputation for easy-to-drive, smartly engineered cars with good fuel mileage.

"It has to be a home run," said Lars Luedeman, head of Grant Thornton's auto advisory practice. "It's their bread and butter, a very high-margin vehicle."

Unlike the Civic, the next Accord will be equipped with Honda's newest engines and transmissions -- technologies the company hopes will make its cars the most fuel-efficient in their class by 2015. It will be the first time in a decade Honda has overhauled the Accord's engine.

Rivals have watched Honda's missteps with private glee.

Nissan even ran a commercial last August which shows a loaded Nissan car carrier being driven past a frustrated Honda dealer in a poke at its rival's low inventories due to last year's Japanese earthquake and Thai floods.

For Asahi and Minami, the pressure is on. They must ensure the next generation of Honda vehicles wow consumers. "What we need to do is to raise the quality of the output by such a high margin that it will shut everybody up," said Asahi.

To that end they have already sent numerous projects back to the drawing board, they said. "The tension when we did that -- it was like all the air was being sucked out of the room," Minami said. "But that is our job."

[alfafan]

So, how fast can they come up with a new Civic. Besides the quaily and cheapness the next biggest crime was that awkward looking rear bumper. Extra creases back there almost never work. Like someone said "eff it, we're going with that. What's the worst that could happen?".

What's got to be the most frustrating for them though is the cost of manufacturing gap between them and the Koreans.

[brad@fifteen52]

So, how fast can they come up with a new Civic.

They don't need a totally new Civic; just one with a drastically updated interior and whatever new tech they can add quickly. They need to buy time (and good will) until they're ready to get off their asses and add direct-injection, better automatics, and other things their competitors have been using for years.

But I'm betting they still don't get it and will **** up yet again.

[cockerpunk]

i dont think its the style that is hondas problem.

the problem is high revving small displacement motors are just not the future.

i know ... i know ... hard to hear, but its the truth.

[Klim18]

Why can't Honda start making 5 cylinder engines that rev to 8k producing say about 240-250hp?

[chuckster1]

How come we can't get anything like this?

[helement2003]

i dont think its the style that is hondas problem.

the problem is high revving small displacement motors are just not the future.

i know ... i know ... hard to hear, but its the truth.

But it's SO FUN!

[helement2003]

How come we can't get anything like this?

Remember what they charged for the Mugen kitted SI here in the states? A full Mugen Civic SI would be $40k+....

[adrew]

Their cars need to be like they were in the '80s and '90s. Not retro, mind you, but they need to have the same superiority as they had against their competitors back then.

They need to focus on their strengths and get back to their roots: Silky-smooth engines that sound good and rev freely, excellent transmissions, light tossable wishbone suspension, responsive steering, best-in-class fuel economy in all models, simple but extremely high quality interiors with excellent ergonomics — and, especially — mechanical elegance and thoughtful design.

Ditch the SOHC engines currently in the Civic and ISX and replace it with a silky little DOHC K-series. Bring back the wishbone suspensions and get the slop out of the steering. Re-hire the designers who did the old interiors. Get rid of the styling team who made the current frumpy Accord and Crosstour.

[2.0T_Convert]

Remember what they charged for the Mugen kitted SI here in the states? A full Mugen Civic SI would be $40k+....

Try starting at $29,500 for those not adding on every dealer installed pinstripe.

http://www.autoblog.com/2007/10/25/h...n-from-29-500/

8thgencivic.com owners who went Mugen reported thousands off MSRP as well.

[dcmix5]

That Mugen idea was actually the start of the **** slide in my opinion. What a stupid, dumbass idea that was. Charge me $30k+ for a Type-R, not some horrible looking kit. Even then, they should have made the Mugen accessories available over the parts counter ONLY, and let folks pick and choose what they want to add to the Civic. Honda profits, Mugen profits and dealers profit on margin and install if they get it.

Talk Talk Talk Talk Talk Talk...yet again. It is fine and dandy that these guys are talking about making changes, but the people at the top who are currently making all of the stupid decisions are still there making the stupid decisions.

A solution is now required because they got away from doing what they did best, and they are paying the price in the media, and everywhere else. Honda has become too "americanized", and that might sound like a good idea from a potential volume standpoint, but it is not what the soul of Honda is about.

My father, who is a former smoker, once told me that the easiest way to quit smoking was to never start. Honda should have never started down the path of becoming an also-ran, because it is a long road back.

[2.0T_Convert]

Ok. So then it's ok to sell one of these for $30K+

[dcmix5]

I don't even know what that is...I don't buy VW cars, nor care about them.

[Iron Texan]

I hope Honda is taking there sucking seriously. They should give us a Civic hatch or give the Fit a real interior, motor, and suspension, and get rid of that accord crossover trash. Oh and give us some Type R's.

And lastly the most important thing for the future of the company, get back in Formula 1. It was like magic, they pulled out of F1 and I stopped caring about their cars.

[rimtrim]

I've never counted myself as a big Honda fan, but I'm not a Honda hater either, so I hope that means I'm basically unbiased. The problem that I see is that Honda is facing several different dilemmas:

1) There is not much they can do about the exchange rate (and this does affect them even when their assembly plants are in the US). They have to either cost-cut or raise prices. In spite of the bad reviews, the market seems to be mostly accepting their cost-cutting measures on the Civic. If they put the cost back in along with a $1-2K price increase, they might be afraid of what that will do to their sales numbers.

2) Competing forces of traditionalism vs Americanization have been pulling Honda in weird directions. In the previous decade, they weren't exactly wrong (from a business standpoint) to switch to bigger, bulkier vehicles, because that was what was selling. Pure, spartan subcompacts were just not a hot item in 2002. They were able to pick up a lot of new customers with their Americanized models. However, the traditionalists aren't wrong either, when they say that Honda sold out and moved away from its original principles. The question is, what's the right business move here?

3) Realistically, how much ground can Honda expect to regain against the competition? The fact is that in years past, they were working against a lot of mediocre competitors who didn't really care about building great small cars. Today, that has mostly changed. It's not realistic to expect Honda to somehow leapfrog everyone. Like I said above, they will either need to control costs or increase prices. The field is just going to be a lot tighter in the future, and that's less about Honda's failure than about the improvements in other automakers, and the shift in R&D focus toward smaller cars.

I think a lot of the purists just want to turn the clock back to 1990 and relive that year over and over again. I know the feeling well, but you can't tell an automaker to make business decisions based on that.

-Andrew L

[Tuneman7]

How come we can't get anything like this?

Because they would cost 30K+

Because no one would buy them

Because when they did do an NA Mugen Civic Si, they were stripped in the dealer lot by vandals (Why we can't have nice things)



I'm surprised they didn't strip the uber JDM wing off the rear somehow. Although I'm guessing it would probably give away the robber's MO running a Mugen wing on their Civic DX.

[C4 A6]

People will DEFINITELY pay for a $30k+ Type-R.

Granted, the first years of the 97 and 98 ITR were technically a sales flop because no one really knew what it was (hence the 1999 absence from the US). Then the magazines got their hands on one and started praising it, leading to the rebirth for 00 and 01. Since then, the US has craved another no-holds barred Type-R, and Honda has failed to deliver.

Just because it's a $30k+ Civic doesn't mean it's any less of a performer. Sure it would seem on the expensive side for a FWD car, but when you think about all the engineering that goes into one, plus resale value, 4 door practicality, reliability, exclusivity, and performance, it would be worth it in the long run.

[Pennywise]

People will DEFINITELY pay for a $30k+ Type-R.

Granted, the first years of the 97 and 98 ITR were technically a sales flop because no one really knew what it was (hence the 1999 absence from the US). Then the magazines got their hands on one and started praising it, leading to the rebirth for 00 and 01. Since then, the US has craved another no-holds barred Type-R, and Honda has failed to deliver.

Just because it's a $30k+ Civic doesn't mean it's any less of a performer. Sure it would seem on the expensive side for a FWD car, but when you think about all the engineering that goes into one, plus resale value, 4 door practicality, reliability, exclusivity, and performance, it would be worth it in the long run.

. there are people that pay the 8k +/- for a mugen package on the CRZ. there is a market. the people that buy the performance version of econoboxes know why they're buying the car. the DC5 Type-S, IMO, couldn't hold a candle to the DC2 ITR, and for some reason i still have hope that they can make something along the lines of the old ITR. there are only so many clean EG's and DC2's to throw B-series or K-series motors into.

[Tuneman7]

Just because it's a $30k+ Civic doesn't mean it's any less of a performer. Sure it would seem on the expensive side for a FWD car, but when you think about all the engineering that goes into one, plus resale value, 4 door practicality, reliability, exclusivity, and performance, it would be worth it in the long run.

The niche would be so tight for it, the only way they could offer something like that would be something in limited production. The Mugen Civic Si that we got here in the U.S. was essentially just an Si with revised suspension, sports exhaust, and the wheels/aero kit and it was still priced at 30K.

[A.Wilder]

I'm surprised they didn't strip the uber JDM wing off the rear somehow. Although I'm guessing it would probably give away the robber's MO running a Mugen wing on their Civic DX.

the wing won't fit on an EG

[2.0T_Convert]

People will DEFINITELY pay for a $30k+ Type-R.

A company like Honda can't survive on selling $30K plus Type-R models.

The bread and butter products need to be fixed ASAP first.

[alfafan]

Talking about Mugen type expensive low volume vehicles is pointless. What do they add to the bottom line? Were they even successful as halo cars?

[zhenya00]

3) Realistically, how much ground can Honda expect to regain against the competition? The fact is that in years past, they were working against a lot of mediocre competitors who didn't really care about building great small cars. Today, that has mostly changed. It's not realistic to expect Honda to somehow leapfrog everyone. Like I said above, they will either need to control costs or increase prices. The field is just going to be a lot tighter in the future, and that's less about Honda's failure than about the improvements in other automakers, and the shift in R&D focus toward smaller cars.

I think a lot of the purists just want to turn the clock back to 1990 and relive that year over and over again. I know the feeling well, but you can't tell an automaker to make business decisions based on that.

-Andrew L

People aren't suggesting they turn the clock back, but rather that they return to the principles that made their cars work so well in 1990. C&D's 10 best from 1989 was just posted - go take a look at that article - yes, there are 3 Honda's in that list, but the list is almost entirely Japanese - there was lots of competition then too.

What Honda did really well then was make well engineered cars where all the details were thought out, without being expensive. I maintain that that philosophy could get them back on track again today. Most modern cars I drive are perfectly fine automobiles in most ways, but very few of them in the entry to mid-market range don't have a whole slew of issues that leave me wondering how they got out of the design labs like this. There is still room in the market for great engineering and design at a good price.

[C4 A6]

The niche would be so tight for it, the only way they could offer something like that would be something in limited production. The Mugen Civic Si that we got here in the U.S. was essentially just an Si with revised suspension, sports exhaust, and the wheels/aero kit and it was still priced at 30K.

Well of course. How often do you see Mustang GTs and how often do you see ITRs?

Honda made the Type-R family more than just another trim level. They reengineered nearly every part on any car that was about to get a Type-R badge.

[C4 A6]

And lastly the most important thing for the future of the company, get back in Formula 1. It was like magic, they pulled out of F1 and I stopped caring about their cars.

Wasn't it Soichiro that said "Without racing, there is no Honda"?

[Tuneman7]

Talking about Mugen type expensive low volume vehicles is pointless. What do they add to the bottom line? Were they even successful as halo cars?

It would offer a fun/sporty vehicle in the lineup but I think that in particular an expensive Civic based performance car wouldn't be the greatest way of going about it. If they could make a fun, affordable, 2+2 coupe on an existing chassis then that would be a more feasible option.

I've read rumors of Honda considering an affordable sporty coupe much like the Prelude.

Well of course. How often do you see Mustang GTs and how often do you see ITRs?

Honda made the Type-R family more than just another trim level. They reengineered nearly every part on any car that was about to get a Type-R badge.

I actually don't think the Type-R's are that expensive as they lack some of the creature comforts from the standard cars but those Mugen cars, especially the RR, costs more than 40K USD. According to Wiki, the Type-R was around 25K USD which is fair I think and mind boggling when you consider how much the Mugen Si was priced at.

[zerind]

Honda Automobiles is turning into the Research in Motion of the automotive world. Sigh. At least their power equipment still kicks ass.

[2.0T_Convert]

Wasn't it Soichiro that said "Without racing, there is no Honda"?

BMW has gone back on many statements or so folks say. Cupholers, FWD, M-powered SUVs, etc...

I don't see a problem.

And Honda still participates in racing.

[whitejeep1989]

How come we can't get anything like this?

I doubt if the average Civic customer is shopping for a Fast & Furious wannabe.

Maybe Honda needs to bring back the Prelude and CRX, to carry the performance banner for the brand, and let the Civic go back to being a simple, affordable, well made, and fun to drive car.

[Jedidub]

Their cars need to be like they were in the '80s and '90s. Not retro, mind you, but they need to have the same superiority as they had against their competitors back then.

They need to focus on their strengths and get back to their roots: Silky-smooth engines that sound good and rev freely, excellent transmissions, light tossable wishbone suspension, responsive steering, best-in-class fuel economy in all models, simple but extremely high quality interiors with excellent ergonomics — and, especially — mechanical elegance and thoughtful design.

Ditch the SOHC engines currently in the Civic and ISX and replace it with a silky little DOHC K-series. Bring back the wishbone suspensions and get the slop out of the steering. Re-hire the designers who did the old interiors. Get rid of the styling team who made the current frumpy Accord and Crosstour.

Car needs ninjasamuraiation.

[Aw614]

. there are people that pay the 8k +/- for a mugen package on the CRZ. there is a market. the people that buy the performance version of econoboxes know why they're buying the car. the DC5 Type-S, IMO, couldn't hold a candle to the DC2 ITR, and for some reason i still have hope that they can make something along the lines of the old ITR. there are only so many clean EG's and DC2's to throw B-series or K-series motors into.

Wasnt the DC5 Type S more of a GSR replacement?

[C4 A6]

I doubt if the average Civic customer is shopping for a Fast & Furious wannabe.

Maybe Honda needs to bring back the Prelude and CRX, to carry the performance banner for the brand, and let the Civic go back to being a simple, affordable, well made, and fun to drive car.

Do you even KNOW how good the FD2 CTR is?

[SSLByron]

Why can't Honda start making 5 cylinder engines that rev to 8k producing say about 240-250hp?

[rimtrim]

What Honda did really well then was make well engineered cars where all the details were thought out, without being expensive.

But I think most companies do that now. It's all relative. My ex-girlfriend drives a '91 Civic base hatchback with the 4-speed manual. To its credit, the thing has 250K miles on it and just will not die. But in my experience, it's still a loud, rough-riding, basic economy car. I don't mean to be insulting -- any car that can go 250K is a great car by definition. I just don't see anything particularly magical about its design. These cars were so well-regarded when new because other people were driving Excels and Citations that could barely make it out of warranty without some kind of disaster happening.

Honda doesn't have the luxury of competing against stuff like that anymore. Plus, the cost situation is not on their side. I think that's being underestimated by a lot of the armchair analysts looking at the Japanese automakers. When it costs you $20 to produce a part and Hyundai $10, it's hard to get ahead. That will gradually change as they find more and more ways to shift costs away from Japan and the yen. But they also face the political unpopularity of doing that. Imagine if GM had avoided bankruptcy by firing the UAW and moving all production to China. That probably would not have gone over too well in Michigan. That is basically the choice the Japanese makers are facing right now because of the exchange rate.

-Andrew L

[Dave Zero]

Honda doesn't offer a V8, even in the flagship. When the horsepower wars were on a few years ago, people said why no V8, but now with gas prices, money spent developing a V8 would have been wasted.