Honda names new president and CEO, struggles to find buyer for F1 racing team

Honda, Japan's No.2 automaker has followed its bigger rival Toyota in shaking up the top management in this hour of crisis. Yesterday, Honda said senior managing director Takanobu Ito would step in as president and CEO in June. Takeo Fukui, a 40-year veteran of the company who has served as CEO since 2003, will stay on the company's board and become an adviser, the automaker said. (See: Founder's grandson Akio Toyoda to head Toyota)

Ito has been with Honda since 1978, when he started in the company's research and development division. He moved up the ranks to head Honda R&D Co. Ltd. and in 2007 was named chief operating officer of automobile operations and senior managing director. Honda said Ito also would take on the title of president and director of Honda R&D when he's named chief at a June shareholders' meeting.

He steps in as the company continues to adapt to a drastic slowdown in the auto industry by slashing production, cutting temporary workers and sidelining development plans. Honda in January told investors it expects its profit to tumble 87 per cent for the year ending 31 March while vehicle sales should fall 10 per cent. (See: Numbers dented, Honda reduces profit forecast)

Declining North American sales, which fell 8 per cent in 2008 after double-digit percentage declines in the last few months of the year, drives that decline. With a series of four production cuts in the course of three months, Honda lowered its North American production plan by more than 200,000 vehicles for the fiscal year ending next month. (See: Japanese auto makers cut back on production, reduce workforce)

Ito blamed falling sales in Japan on a lack of creativity among automakers. "I think the auto industry lost the game when it believed it could sell any car it produced," he said.

Under Fukui's watch, Honda invested heavily in expanding production of fuel-efficient cars, chasing Toyota's sales lead in fuel-sipping hybrids. It also pushed ahead with the planned launch of a light business jet. But the end of his presidency looks set to be overshadowed by the severe auto industry downturn, which prompted Fukui to announce in December the shock withdrawal of the Honda team from Formula One.

Honda has also been trying to find a buyer for its team after it announced in December it was quitting F1 to focus on its core business of making and selling cars. The Honda team, with an operational budget of around $294 million, finished next-to-last in ninth place in the F1 constructors' standings last season. Honda, which originally entered F1 as a constructor for a stint in the 1960s before returning as an engine supplier in the 1980s, bought out BAR Racing in 2005.

Fukui said Monday that talks with potential buyers for its struggling Formula One team were proving tough with few parties interested in making a "serious" bid. "The reality is that talks are proceeding with great difficulty," he said.