Civic Duty: Honda CEO Shoulders Blame for Slump

There's certainly plenty of blame to go around for the disappointing year that Honda has had. Start with Mother Nature: an earthquake in Japan and flood in Thailand. But human error also has played a large role in the brand's recent swoon in the U.S. market and worldwide.

For blame, you can now start with Honda Motor CEO Takanobu Ito and decisions that the company made concerning the less-than-impressive new Honda Civic, a mainstay of its product lineup. Civic sales have dipped by 15 percent so far this year in the U.S. despite the launch of the new version, and not just because of supply constraints caused by the natural disasters.

During a roundtable with journalists at the Tokyo Auto Show, Ito said that "the ultimate responsibiity" for decisions about the new version "rest[s] with me." But what decisions? How exactly did Civic, once a darling of Consumer Reports auto evaluators, end up left off the list of "recommended" vehicles for its 2012 version?

The magazine cited cheap interior plastics. Certainly Ito didn't sign off on one particular polysterene, or whatever, over another. The chief apparently didn't get specific with automotive journalists at the Tokyo show about what exactly he personally might have decided wrongly.

But what he probably means is that Honda guessed wrong in a strategic sense about Civic. Making crucial decisions about quality of materials and the level of "contenting" of the car during the depths of the global Great Recession, Ito and his advisors apparently embraced significant assumptions about the future auto market that were practically 180 degrees divorced from how reality turned out to be. They figured that financially strapped consumers of 2011 would want stripped-down small cars with lower prices.

Exactly the opposite has happened with small, fuel-efficient vehicles where Honda specializes: Americans and consumers in other global markets have demanded "loaded" small cars that, in addition to fuel economy, give them amenities such as high-grade interiors, push-button starts, infotaintment systems such as Ford's Sync, and even gimmicks such as "self-parking" that used to be the province only of luxury brands.

Recognizing the mistake, Honda has said that it plans to overhaul the Civic yet again sooner than it normally would have, maybe as soon as 2013. But in the meantime, Ito wants the buck to stop where it should -- at the top. One bright spot, at least: the 2012 Honda Civic Natural Gas was just named 2012 Green Car of the Year by the editors of Green Car Journal.