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Yup...in the latest JD Power rankings, they took a dive as well.
Honda's CEO will centralize decision making as quality crisis hits profits
I posted the following on the OD thread but others may be interested as well.
www.reuters.com
"In the 1980s and much of the 1990s, the name Honda struck terror into the hearts of executives at the big three U.S. carmakers in Detroit because they simply couldn’t match its low-cost, efficient, well-built cars. But after a slew of recalls since 2014 for problems with components such as airbags, sliding doors and engines, Honda’s status as a benchmark for quality and efficiency has been seriously damaged - and the quality crisis is hitting profits. According to five Honda insiders, quality blunders have helped squeeze the operating margin at its global automotive business to 2%-3% - giving it less room for maneuver just as bigger rivals are building partnerships and overhauling their operations to become stronger."
Honda's Hachigo seizes the wheel as quality crisis hits profits
At a two-day gathering for Honda's suppliers in March, Chief Executive Takahiro Hachigo sounded the alarm.
www.reuters.com
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Good news they are acknowledging the issue and working to correct it.
We purchased a base CRV to keep the 2.4 motor, we would have preferred to purchase with leather and other options but at the time the OD issue was very new, no fix and no feedback from Honda about it so we did not want to take the chance on a vehicle we will keep for 10 years 150k miles.
We purchased a base CRV to keep the 2.4 motor, we would have preferred to purchase with leather and other options but at the time the OD issue was very new, no fix and no feedback from Honda about it so we did not want to take the chance on a vehicle we will keep for 10 years 150k miles.
Well yes Subaru does have OD, but their are suffering due to quality issues now that they have mass production.
When you sell enough cars to enough Karens, you start seeing a lot more Karen behavior. Subaru has finally decided to address their quality issues.
They were a small enough brand that they got away with bad quality for decades.
This somehow reminds me of Hyundai. Before 2011, Hyundai Sonata sales volume wasn't that high but then starting with the model year 2011, their Sonata sales increased greatly due to better styling and better quality. Sales continued to zoom upward until the metal shaving in engine issue appeared. I bet on the Hyundai forums back then, the Hyundai die-hard also brushed it off as nothing and pointed to the increased sales volume and very few cases of cars failing as their defense. Now with Sonatas with engines with 100K miles and failing in greater number, the reputation hit home. Well, now, the issue has caught up to them and their Sonata sales correspondingly plummeted. So to draw a parallel comparison, the OD issue and other issues do not seem to be a big deal right now to dent sales but once people have enough exposure to the problems, Honda sales will be hit.
But you are also comparing an issues that has destroyed engines. If we had members with failing engines, the outcry would be astronomical due to sales volume.
As Dilbert said "They put the K in quality"
As a 4 time Subaru owner - they had better quality than Honda in the 1980's and 1990's until they insisted on all cars being Awd. That made me leave Subaru for Honda again.
I left Honda in 1980 because they would not put factory air and cruise control on any car.
Any company that had an engineer in charge that has a bean counter replace him usually leads to poor quality or the company vanishing like Computer company Wang - great computer - insisted on more profits until all customers abandoned them.
As a 4 time Subaru owner - they had better quality than Honda in the 1980's and 1990's until they insisted on all cars being Awd. That made me leave Subaru for Honda again.
I left Honda in 1980 because they would not put factory air and cruise control on any car.
Any company that had an engineer in charge that has a bean counter replace him usually leads to poor quality or the company vanishing like Computer company Wang - great computer - insisted on more profits until all customers abandoned them.
This OD is too recent to know. Like I mentioned, there are Sonatas out there with over 100K miles before the engine seizes up due to this issue. My co-worker has such a car. The blessing is that Hyundai was willing and replaced the engine for him with a brand new engine. That restored some faith in Hyundai for me. However, when the issue first surface, it was the customary denial, just like what Honda is doing.
Didn't the Sonatas have early failure during the warranty period though? Especially since the issue was from a manufacturing fault.
We don't have an issue with early engine failures. Will we? Probably not before 100k miles or 10 years.
This is a very, very common announcement from many consumer goods companies, both fmcg (fast moving, like soda and soap) and smcg like cars and refrigerators. In the 80s and 90s all of the management consulting companies were telling everyone " the markets need agility " and to decentralize and let individual markets have the control. Many companies set up "tech centers of excellence" all over the world specializing in different areas, and Honda is no different.
Similarly now all the management consulting companies are telling everyone "The markets need control" and to re-centralize and become more top-down. 15 years from now the same consulting companies will be telling Honda and everyone else to decentralize again because "the market needs agility to compete". Guess who wins in this arrangement? CEOs and management consulting companies.
I'm highly cynical with these announcements. Failures of quality are failures of leaders, not structure. Blaming it on structure is a way to keep your CEO job and to keep the management consulting companies in business. All of the distributed tech center VPs will get nice packages and the employees underneath them will get left holding the bag ("we didn't eliminate your job, it's in Japan now" or similar).
The announcement is working though, look how many people here are assuming it's the solution... I think we all agree that something needs to change at Honda - this announcement is hollow, though, unless followed up with some real change in training and behavior.
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Similarly now all the management consulting companies are telling everyone "The markets need control" and to re-centralize and become more top-down. 15 years from now the same consulting companies will be telling Honda and everyone else to decentralize again because "the market needs agility to compete". Guess who wins in this arrangement? CEOs and management consulting companies.
I'm highly cynical with these announcements. Failures of quality are failures of leaders, not structure. Blaming it on structure is a way to keep your CEO job and to keep the management consulting companies in business. All of the distributed tech center VPs will get nice packages and the employees underneath them will get left holding the bag ("we didn't eliminate your job, it's in Japan now" or similar).
The announcement is working though, look how many people here are assuming it's the solution... I think we all agree that something needs to change at Honda - this announcement is hollow, though, unless followed up with some real change in training and behavior.
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The key point that, based on your comment here, I think you completely overlooked is that the CEO of Honda specifically states that Honda made a mistake decentralizing R&D and allowing different Honda regions leadership have too much control over feature and functions specific to their perceived regions needs.
In my experience, organizational structure has as much, if not more, influence over positive/negative outcomes in a large manufacturing company as specific leadership does.
Note that the CEO is not only recentralizing R&D, he is also removing layers of management as well.. particularly regional management where it previously had some control over R&D.
Honda is lucky here in some ways.. because they are number one in the world for motorcycles and have been for a long time... and the CEO credits this with Honda never having decentralized R&D like they did some years back with cars/SUVs/etc. Honda is essentially admitting organizational fault and returning to an R&D model that has served them well until it was tampered with.
To me, the defining thing here for Honda is as vehicles become more and more electronic and systems are very tightly integrated across the entire vehicle platform.... R&D and production outcomes benefit from very tight focused and centralized control of both. Since Honda is rapidly evolving their platforms away from gas engines and toward a range of hybrids and plug-ins.... this is even more important in my view.
You cannot stay profitable in the above scenario if your regional divisions are controlling R&D.. and are in fact pulling Honda left and right in the process. It just creates a lot of confusion and extra cost.. and with that it is no surprise that quality has slipped as well under the Decentralized R&D model at Honda. So a return to their prior organizational model for development will benefit a lot things.. most of which directly benefit the consumer.
The CEO of Honda clearly understands this, and is returning Honda Automotive to it's original roots of approach and organization it used to have, and which they never departed from in motorcycles, or even their aircraft division.
Good move by Honda.. though it will take several years to reduce the organizational damage and it's resulting cost burden.
Note: the earmark of the article centered around Honda trying to address their declining margins, even though their world wide sales volumes have actually been growing. The "quality" sound bites were more about attracting the average consumer to read and care.
You cannot stay profitable in the above scenario if your regional divisions are controlling R&D.. and are in fact pulling Honda left and right in the process. It just creates a lot of confusion and extra cost.. and with that it is no surprise that quality has slipped as well under the Decentralized R&D model at Honda. So a return to their prior organizational model for development will benefit a lot things.. most of which directly benefit the consumer.
The CEO of Honda clearly understands this, and is returning Honda Automotive to it's original roots of approach and organization it used to have, and which they never departed from in motorcycles, or even their aircraft division.
Good move by Honda.. though it will take several years to reduce the organizational damage and it's resulting cost burden.
Note: the earmark of the article centered around Honda trying to address their declining margins, even though their world wide sales volumes have actually been growing. The "quality" sound bites were more about attracting the average consumer to read and care.
I think the only thing I disagree with you on is the motive and tone of the announcement... I've seen the exact same one before, different companies, same boiler plate reasons.
I'm not disagreeing with the problems associated with the current decentralized approach. A fun exercise, left to the reader, would be to catalog, for every current generation Honda and Acura, how many different head unit interfaces are present. with knob, without knob, with steering wheel controls, without certain controls, with Honda link, without a cell connection, with touch control or paddle, whatever. Our clarity has a steering wheel volume control with the same swipe action as the CRV, except the swipe is permanently disabled. it was launched in the US after the CRV, except it has the old Civic head unit design without a volume knob. So now there's a non-functional steering wheel control.
The same problem is playing out behind the scenes with the automatic driving systems. There's two different companies, Bosch and NIDEC, with different versions of the hardware and different configurations in every car that has these. It appears Nidec is the older system, but new cars keep getting launched with it instead of the Bosch. The new accords, CRV, and Civic hatchback have Bosch... Other civics have Nidec and I'm not sure what the HRVs have.
Now imagine this kind of idiotic differentiation across all of the fundamental car systems... Of course it's a mess , and a costly nightmare to manage supplier quality, systems integration, and response to customer issues, and needs to be cleaned up.
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I agree, and your example with your Clarity exemplifies exactly the problem here for Honda with a decentralized R&D.. that is being jerked around by the regional divisions. It's nuts.
The article linked noted that for 2020... in north america... Honda offers 13 different Accords! That is absurd and very different from the Honda I grew up knowing as a company. In fact.. for many years.. consumers were bent about Honda not allowing owners to custom order their configurations. Now it looks like Honda America (I don't blame Honda Canada as their sales volumes are small compared to the US division) has run completely amuck.
Absolutely agree with you on this. Imagine how the dealers feel about all this confusion as well.
This is classic "decentralized" Honda doing a waffle as they add components from outsource and not being firm and consistent in their choices. But as they approach higher levels of autonomous behavior in their vehicles, they cannot afford to keep doing this. Honda rolls out level-3 autonomy (essentially automated freeway driving) next year (see link below).. so its time for them to get really serious if they want to be a largely hybrid/electric Level-4 autonomy provider of vehicles by 2025 and beyond.
I do think the dust is clearing on this as Honda appears now to have chosen to invest into an equity stake, + R&D funding over the next decade, in GMs Cruize division and the two companies are doing joint design as true level-4 autonomous driving systems begin to be within reach by R&D. I see the Honda CEO's hands all over this move too.. which to me demonstrates that he is dead serious about fixing the meandering R&D at Honda, and not just providing doubletalk to the consumers. https://www.theverge.com/2017/6/8/15761272/honda-self-driving-cars-autonomous-level-4-date Waymo will be the big loser with this... and since they have a different business model then Cruize.. I can see why Honda backed out of signing with Waymo.
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I wouldn't agree with your generalization. I had a Subaru Loyale in the late 80s. It was a serious steaming pile. I replaced it with an Accord which was fantastic.
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