By Chris Haak
Honda President Takeo Fukui has undertaken several dramatic actions today as Honda begins to feel the effects of the global recession and the terrible new car market. Fukui has cut operating profit forecasts again, saying they will fall 81.1% – less than two months after saying they will fall 67.3%. Further, in a move to be mourned by gearheads everywhere, Fukui canceled the NSX supercar program, which was tantalizingly close to being production ready, having already run several hot laps around the Nurburgring Nordschleife.
The news conference at which Honda made these and other announcements was hastily moved up two days ahead of its originally scheduled time because of the urgency of the situation. Part of Honda’s problem is that the value of the yen has climbed 18% against the US dollar since August – hurting margins on exports from Japan to the US that Honda depends on – while sales in the US also collapsed outright.
The cancelled Acura NSX was to have been nothing like its predecessor (mid-engine, naturally aspirated V6 with aluminum construction, and 290 or fewer horsepower); instead, the new NSX was to feature a front engine V10 configuration, with the V10′s output over 500 horsepower. Fukui had reportedly tasked his engineers with building a car that bested all comers at the Nordschleife – including the Nissan GT-R, Corvette ZR1, and others. Now, all we’ll have are some spy shots of the prototype on the track there, covered in hideous black disguise.
Last week, Honda dropped the bombshell that it was pulling out of F1 racing, in spite of a long history associated with the sport that dated back decades. Other moves that Honda is undertaking to conserve money include:
- Delaying the opening of a new R&D center in Japan, as well as delaying the opening of two new factories in Japan
- Delaying the introduction of new clean diesels in the US and Japan that would have bolstered the already good fuel economy of the Acura TSX and made the Ridgeline a more credible entrant in the truck space
- Cancelling plans to launch the Acura brand in Japan in 2010 (vehicles badged as Acuras in the US, if they are sold in Japan, are badged as Hondas there – and now will continue to be)
- Cutting executive salaries by 10%
- Delaying factory expansions in Turkey and India
- Cutting 450 contract workers by February, bringing the total number of job cuts in Japan to 1,210 during the fiscal year.
- Cutting global production by a total of 314,000 units for the past fiscal year, including another 54,000 just announced
Other moves that Fukui announced included that Honda is going to examine all investments in progress with a critical eye, and focus the automaker on its specialty of small, fuel-efficient vehicles. He also said that Honda would begin development of a sub-Fit size vehicle for developing markets, which would hit the market in about three years.
I don’t want to use this venue as another opportunity to bash the decision making (at least until recently) and mindset in Detroit, but the fact that Honda’s CEO is in panic mode and isn’t even projecting losses – just less profit – tells me all that I need to know about the differences in the way his company is run versus the way GM, for example, has been run over the past few decades. Fukui’s sense of urgency and crisis is something that sure would have come in handy for GM a few decades ago – if not during the 2006/2007 timeframe, when the company might have had a chance to save itself from now depending on a government bailout to even survive. Interesting how Honda feels it can’t afford the NSX so cancels it, yet nearly bankrupt GM trots out both the Cadillac CTS-V and Corvette ZR1. Both are awesome cars, but both are also luxuries that a company on the brink can ill afford to devote resources to. Live and learn.
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