Automotive News - November 3, 2008 - (Page 24)

24 • NOVEMBER 3, 2008 TA L K F R O M T H E T O P Flexibility will help Honda survive the storm H onda Motor Co. has weathered the U.S. market downturn better than its major competitors, thanks to fuel-efficient vehicles and flexible manufacturing. CEO Takeo Fukui says his company expects worse times to come. The key to staying ahead of rivals will be rolling out cars with ever-better fuel economy and not falling into the incentive trap, he says. Speaking through a translator, Fukui talked with Asia Editor Hans Greimel. Through September, Honda’s U.S. sales are down about 1.1 percent. How is the market shaping up for you, and what are the biggest challenges? In the United States, there was a drop in September, and we are struggling in October in terms of year-on-year comparison. But still it continues that we don’t have enough inventories of some models such as the Civic and Fit. With the Civic, we have not been able to reach our standard inventory level. With Fit, we are completely out of inventory. There’s a supply problem. Honda recently moved its V-6 Accord production to Alabama to free production capacity for smaller cars elsewhere. What else is Honda doing to bring more small cars to America? Once the Indiana Civic production ramps up, I think that we’ll see a solution to the Civic supply problem. (The goal for the Greensburg, Ind., plant is 400 vehicles a day by the end of March 2009 and 800 vehicles by the middle of 2009, when the second shift is added.) This will also have a double impact. Once we have more Civic supply coming from Indiana, we can reduce the number of Civics exported from Japan to the United States, meaning that Japan can produce more Fits for the market. What is your forecast for overall market volume in the United States this year and next? Probably the information from the Japan Automobile Manufacturers Association is accurate. They say something under 14 million. I think that’s about right. Will 2009 be worse than 2008? It would be nice if we started seeing some improvement in 2009. That is for sure. But that is not the premise for our business activities. What we hope for, what we assume, for our business activity is different. I think we need to base our activities on more pessimistic scenarios. Has lack of flexibility been a big problem for the U.S. manufacturers? I think that’s one of the problems. They lack the flexibility to keep up with changes in the market. There are the concepts of flexibility and efficiency. If you pursue efficiency, then you get more rigid, so you lose flexibility. When times are good and you’re going at full production capacity, of course it’s better if you can produce one single model at full capacity. But we have been putting a lot of effort into enhancing our flexibility while not sacrificing our efficiency. Honda has been praised for resisting the temptation to roll out V-8 engines and full-sized pickups ahead of the market downturn. Are there still opportunities for such products at Honda? In the past, we have considered a V-8 sedan as well as a pickup truck, assuming it would use a V-8. But we aborted that idea. Generally speaking, there is not much potential for pickups going forward. Still, I think Acura will probably need some kind of a sedan including a V-8. You’re not concerned about bringing out a V-8, even in the current market? We can’t say when, but when we do it sometime in the future, we will be coming up with a V-8 that’s completely different from conven- everyone else, what does that mean? The first thing is mileage. It will be the most updated V-8, which means it will have to be compact, lightweight, get excellent performance and get good fuel efficiency as well. Honda is famous for its engines, but there is rarely any talk about gasoline direct injection. What does Honda have planned regarding this technology? I think all automakers are pursuing gasoline direct injection right now, but I don’t think it will really work on the market until compression ignition becomes established. I think it’s very important to enhance the efficiency of internal combustion engines. Without that, there won’t be that big of an impact, even if we combine it with an electric-hybrid drivetrain. Europe and the United States are implementing new rules to limit carbon dioxide emissions and improve fleet fuel economy. What does Honda have to do to meet these standards? We came up with the Insight, assuming the requirements in Europe and the U.S. CAFE would be very stringent. I believe vehicles like the Insight and CR-Z will be very powerful for us. The U.S. fuel economy targets vary among manufacturers, depending on vehicle size. Your top competitors — Toyota, Nissan, GM and Ford — are likely to have lower interim targets than Honda. Are the rules being considered fair to companies that already have clean fleets? I think it’s unfair. Of course, once the standards are established, we will comply with them. I don’t think it is right to place a penalty, instead of an incentive, on those who started earlier. What do you think about the U.S. government’s guaranteed loans to troubled automakers? I’m not too nervous about this. Unless there is real blatant unfairness applied to it, I think it’s only natural that the U.S. government tries to provide some support to U.S. manufacturers. Does Honda have any intention of pursuing such loans? At this point in time, no. But of course if we can get loans at preferential rates, we need to consider it. Toyota has introduced 0 percent financing to help it survive the U.S. downturn. Does Honda have any plans to increase its incentives? We have no intention whatsoever to do that. I think Toyota is also in a situation where they have no choice but to do it. But if you don’t have to do it at all, it’s all the better. If we sell new cars at a lower price, that will lower the price of our used cars. That’s why we’ve been putting all our efforts into flexible production, so we won’t have a situation of excessive supply. Honda is cool to electric vehicles. What kind of pressure are you coming under to develop them, now that many of your rivals are announcing plans to launch their own? The ultimate electric car will have to be the fuel cell vehicle. Battery-based electric vehicles aren’t really practical at this point in time. When it comes to plug-in hybrids, there may be possibilities, but it depends on U.S. regulations and government incentives. What models don’t you have in the United States that you wish you had? I think we need something that gets better efficiency in the Accord or light-truck range. With the Insight, I think we have good prospects for smaller vehicles. Right now, U.S. customers are said to be shifting to small cars. But I think they inherently like large cars, so they’d like large cars with better fuel efficiency at a reasonable price. That is something we need to address. c KIM KYUNG-HOON/REUTERS Takeo Fukui Are you worried that if an American automaker goes bankrupt, there will be a backlash against successful Japanese companies? Of course there will be some risks like that. I’d prefer that not to happen. tional, past-generation ones. Probably we will not produce any pickup trucks based on the old conventional ladder frame structure. It sounds like you are very committed to someday having a V-8 Acura. In April, Acura dealers in the United States were told that a V-8 Acura would be coming within 18 months. I feel the need for it because I know the needs and wishes of U.S. customers. To us, the Acura brand in the States is very, very important. And if you look at the models offered, it’s not perfect. I don’t think that the Acura RL 3.7-liter is sufficient. We can’t compete with other premium brands. So you are confirming plans for a V-8, but just not disclosing the timeline. I can’t talk about the timing. But regarding the direction, yes. When you say you need a different V-8 from

Table of Contents Feed for the Digital Edition of Automotive News - November 3, 2008

Credit? Come and get it, industry groups say GM's product delays signal dire health Ford sticks with small-car plans Mitsubishi CEO: Let's halt Galant production in U.S. A dealer â and his reputation â on the ballot Help vehicles shed pounds American Axle posts loss UAW hires bailout adviser Ford to spend $200 million to upgrade 2 Ky. plants No off-lease cars? Certified will find others Arlena Sawyers China's stock market plunge has spooked car shoppers Advantage, Ford: Mulally likes owning Ford Credit Supplier execs join innovation panel at congress Quietly, Mini seeks 500 drivers to lease electric car for a year Reynolds bolsters document business Winterkorn: Audi needs to build in U.S. The great revenue drop of 2008 Bidders bet they can rebuild Heard 1 size fits all NADA: Give us tax incentives, dealer loan guarantees Campaigns' climate, energy plans hit economic wall Detroit 3 need and deserve U.S. help now Chrysler needs a buyer, but not GM Dealers pay fair share of taxes Washington hurts, not helps, electrics Compressed natural gas is the best fuel New ads aim to raise Suzuki's low profile Suzuki's new ad strategist: This brand has soul Fuel efficiency is coming â it just takes time Electrics edge closer by 2010 Tougher CAFE standards loom R&d chiefs shift gears for an electric future Japan carmakers lead charge into electrics Buffett backs BYD's sketchy plan for U.S. electric car Q&A: BYD envisions 2010 exports to U.S., Europe Girding the power grid for an electric fleet Hype powers plug-in vehicles Coachbuilders see salvation in electric cars Electric vehicles are charging into Europe Expect stop-start's big start to arrive in 2010 Flexibility will help Honda survive the storm Nardelli: Bailout not perfect â but needed Audi goes high-tech to boost service Acura offers quick service to win business Toyota's fashion fan Picture this Hondaâs N.A. operating profit falls 80.6% in quarter Aug. RV shipments fall 44% VW drops hints about car for new Tenn. plant Mexico sales fall 10.7% in September Honda to boost CR-V, end Civic output in Ohio Ford and GM jockey for steel discounts Dealers Ford Credit seeks to tap $700 billion package GM will end a used-car incentive early Nissan, Mitsubishi, Mazda recast fiscal 2009 forecasts Metaldyne to bondholders: Take 30% or Chap. 11 looms Detroit 3 ties hurt profits of dealer groups GM takeover would eviscerate Chrysler ranks, model lineup Mitsubishi plans electric hauler To match Toyota, Nissan offers 0% loans Sticker, sticker at the mall, what's the cheapest of them all? The Versa Waiting is what it's all about, Alfa Buy Chrysler? GM should sell Buick to SAIC Pickups pumped up by pump price plunge Chrysler hybrids, we hardly new ye Ghosn: Your best partner is a president in your pocket Sonic wins, but Mercedes wants last word

Automotive News - November 3, 2008

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