Saturday, 26 May 2018

Honda will have partners, not tie-ups

CEO Takahiro Hachigo’s rejection of taking shares in other companies puts Honda on a divergent track.

TOKYO — Honda CEO Takahiro Hachigo has joined the chorus of global executives sounding the alarm about the seismic changes looming over the auto industry.

But he is vetoing one common strategy for confronting that change: There will be no capital tie-ups for Honda.

“We do have a sense of crisis,” Hachigo told Automotive News last week at the automaker’s global headquarters. “Things are changing drastically. So we should not be late in responding.

“But,” he emphasized, “it’s not the case where we have any plans for such equity holdings.”

Hachigo’s rejection puts Honda — a medium-size player globally — on a different course than its two nearest competitors, Toyota Motor Corp. and Nissan Motor Co. Toyota and Nissan have built auto empires by taking shares in smaller competitors. Toyota has stakes in Subaru, Mazda and Isuzu as well as a partnership with Suzuki. Nissan owns a controlling stake in Mitsubishi on top of its global tie-up with Renault and its affiliated companies.

Honda remains stubbornly independent in an age of consolidation.

But even as Hachigo rules out cross-ownership arrangements, Honda’s go-it-alone days are coming to a close, with the industry beset by a rush of new technologies and new competitors. Honda’s revised strategy calls for loose partnerships to cover its weak spots, and it has been signing deals at a steady clip this year. Hachigo said that will continue.



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“Next year, too, we will build such partnerships speedily,” he said.

Hachigo’s assessment came just days after his company announced it will partner with SenseTime Group, of China, to develop artificial intelligence.

That followed an announcement last month that it will team with Japanese telecom giant Softbank Corp. to research superfast 5G next-generation mobile networks for use in vehicles.

The push continues at next month’s CES in Las Vegas, where Honda’s high-tech incubator program, Honda Xcelerator, will announce a raft of new startups it plans to support.

Honda Xcelerator exemplifies the new mantra at Honda. The program intends to canvas the globe for up-and-coming potential partners, seeking expertise the old automaker lacks — in fields such as energy innovation, smart materials, robotics and autonomous vehicles.

Honda’s outreach kicked off this year. It said it would partner with Hitachi Automotive Systems to produce and sell electric motors for a future wave of electric vehicles, as well as form a joint venture with General Motors to build costly hydrogen fuel cell stacks for green vehicles at a factory in Michigan.

Hachigo’s comments echo those of other leaders, such as Toyota President Akio Toyoda, who said last month that his company faces a now-or-never race “about surviving or dying.”

But Hachigo dismissed any notion his company’s future was at stake.

“We don’t think it’s business as usual,” Hachigo said. “But we must recognize our strengths. If we continue to play to our strengths, we can gradually adapt to these changes and make whatever changes are necessary.”

Honda’s top strength is a product base extending beyond automobiles to motorcycles, power products, robots and even jet aircraft, he said. Through those offerings, Honda commands the loyal following of more than 30 million customers worldwide, he said.

In a move that underscored Hachigo’s resolve to change with the times — regardless of the pain — the Honda boss in October took the rare step of shuttering a Japanese assembly plant. In announcing the closure of its aging Sayama factory, Honda said it will rearrange its domestic manufacturing know-how toward electrified cars.

Hachigo believes efficient EV manufacturing remains a big hurdle of the new era.

“One technical challenge on our side is to try to make it possible to produce gasoline-engine cars, hybrids, plug-in hybrids and battery EVs in the same way at the same factory,” he said.

“The biggest challenge for us is how to make that happen.”

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