Honda Sets Its Sights On A Different Checkered Flag

The theme was green at the Tokyo Motor Show last fall, as carmakers vied to introduce their most advanced environmentally friendly technology. But all the shrieking and applauding at the jam-packed Honda Motor Co. booth wasn't over its experimental single-file two-seater, or even its bug-shaped solar-powered car. It was for Honda's high-profile Formula One race-car drivers.

Honda's Formula One engines have powered the Honda McLaren Marlboro team to seasonal championships for six years running, sealing Honda's reputation in Japan as an innovator and recharging company morale. More important, Honda's foray into racing has proven a fertile training ground for brainy engineers and spawned such technologies as the more efficient variable valve-timing system, which now shows up under ordinary Honda hoods.

Why, then, does President Nobuhiko Kawamoto say he may withdraw from the track when this season ends on Nov. 8? It's that color green again: Kawamoto wants to focus top talent on superstrict emission requirements looming in California and elsewhere. He thinks adding 100 or so engineers to the 600 already working on more fuel-efficient gasoline engines and electric vehicles, plus the estimated $80 million saved, may give Honda an edge. He'll decide as early as mid-September whether to scrap the immensely popular team for the longer-term payoff of an environmental edge. "We may have to make some sacrifices," Kawamoto says.

BEST BET. He's not alone. All auto companies are up against lawmakers so eager to clear the smog that they're setting targets that are unattainable with existing technology. By 1998, for example, 2% of each manufacturer's cars sold in California must have zero emissions, 10% by 2003. Carmakers figure electric vehicles are the best bet for zero emissions, but a gradual squeeze on all tail-pipe emissions may soon require alternative-fuel vehicles as well. In the U.S., the Big Three and federal agencies are jointly spending $260 million over the next four years to come up with batteries that can power a commercially viable electric car.

That's why the pressure is on. "I need more engineers," says Hideyo Miyano, head of engine development. "We don't have much time." Miyano sees gasoline-powered cars hogging the road for two more decades, so he's putting 67% of his budget into improving gas engines, 28% for electric vehicles, and the remaining 5% for more far-off possibilities, such as hydrogen and methanol. Last year, Honda introduced a lean-burn engine on some Civic models that emits fewer oxides of nitrogen. But it's only effective on engines up to two liters.

It wouldn't be the first time Honda quit the racing track. It pulled out of Formula One in 1968 after five seasons to focus its brainpower on newly tightened U.S. emissions standards. That's when it came up with the breakthrough CVCC engine that met the standards without requiring a catalytic converter. Honda reentered the Formula One circuit in 1983, with little damage to its reputation since it was then mostly known as a motorcycle maker.

A repeat retreat risks tarnishing Honda's hot-rodder image in Japan, where unit sales are off 8.6%. Honda doesn't want to let go of that aura--it still builds the aluminum $60,000 NSX sports car, even though it makes only five cars some days, 10% of last year's peak. And engineers who would flock to Honda for a crack at designing racing engines may go elsewhere.

SPEECHIFYING. Ironically, Kawamoto probably wants to continue racing more than anyone in the company. His early years at Honda were spent in the pits, designing and fine-tuning engines that Honda raced in its own chassis. When Honda quit Formula One in 1968, Kawamoto was so furious he didn't show up for work for two months until then-President Tadashi Kume coaxed him back. "Making this decision must be ripping him up inside," says Miyano.

Painful as it is, Kawamoto has been laying the groundwork since becoming president in 1990. That year, he gave 99 speeches to Honda employees in which he admitted he would go so far as to stop racing if it were necessary to stay ahead in the race for cleaner engines.

Even more excruciating for Kawamoto, pulling out now could make him look like a sore loser. Honda's two-car team has won only two of 10 starts in the 16-race season that began Mar. 1. Kawamoto confesses that if he has to leave the racing world, he wants to do so in a blaze of glory. When he visited engineers at Honda's research-and-development lab recently, he expressed his dismay at the season's record. "I went out there and yelled: 'What are you doing?' " says Kawamoto, pounding his fist in his hand.

It may be hard to get pumped up over CO2 levels after the thunder of a 650-horsepower machine. But whether Kawamoto walks away from his passion or not, he's in a race where the stakes are far higher.

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