Honda Motor Co. made English the official language of global meetings as the Japanese carmaker shifts decision-making power to regional units.
Chief Executive Officer Takanobu Ito informed global employees of the change in April, John Mendel, executive vice president of the Tokyo-based company’s U.S. sales unit, said in an interview at the Los Angeles Auto Show. Mendel was promoted to Honda’s North American management committee in 2012, in an earlier move by Ito to localize business decisions.
The carmaker’s move follows language conversions by Japanese companies such as Fast Retailing Co., Asia’s biggest apparel seller, and Rakuten Inc., the country’s largest Internet mall. Honda’s new rule applies to in-person meetings and video conferences, raising the chances top executives will use interpreters, as Fast Retailing President Tadashi Yanai and Ito himself have done in news media interviews.
“Imagine the shock sent through the operation,” Mendel said in an interview yesterday. “The CEO stands up and says, ‘All discussions about global operations will be conducted in English and oh, by the way, if you don’t understand it, get an interpreter.’”
Rakuten announced its shift to English as the company’s official language in 2010 and phased in the language’s use over two years. The online retailer’s billionaire President Hiroshi Mikitani, Japan’s third-richest person, earned an MBA at Harvard Business School in 1993.
Yanai implemented English as Fast Retailing’s official language last year, while Tokyo-based tiremaker Bridgestone Corp. decided last month to gradually implement the English requirement.
For Honda, change comes as the third-largest Japanese automaker revamps its Honda and Acura lines to hold off improving Asian and European competitors and the best vehicles from U.S. automakers in a generation. Honda this week announced further modifications to its Civic, the best-selling small car in the U.S., to stay ahead of Toyota Motor Corp.’s new Corolla, Hyundai Motor Co.’s Elantra and Ford Motor Co.’s Focus.
Honda’s sales in the U.S., where it’s the fifth-largest automaker, are up 8.5 percent this year through October and should end the year at a record high, Mendel said, without giving a specific number. The company’s best year in the U.S. was 2007, with Honda and Acura sales of 1.55 million vehicles.
Honda’s U.S. sales unit is in Torrance, California. The company’s American depositary receipts rose 0.5 percent to $42.64 at 2:42 p.m. in New York. They gained 15 percent this year through yesterday.
Honda isn’t the first Japanese automaker to make such a language shift. Carlos Ghosn, chief executive officer of Nissan Motor Co. and Renault SA, implemented a similar policy at Nissan more than a decade ago.
North America accounted for 47 percent of Honda’s revenue in the 12 months ended March 2013.
The adoption of English for global company meetings is a “small, but not insignificant” change, Mendel said. It’s part of a “series of things that are being put in place to kind of provide a different context for our business,” he said.
Honda also said today that its four best-selling models, the Accord mid-size car, Civic, CR-V crossover and Odyssey minivan, lead their category this year through September in U.S. retail sales, citing registration data from IHS Automotive’s Polk unit. Retail sales are to individual customers, rather than business and rental fleets.
While Toyota’s Camry is the best-selling U.S. car, the Polk data show that Accord has outsold it on a retail basis, 279,101 to 265,377, Honda said. Through September, 1,688 Accords were sold to fleets, compared with 48,185 for the Camry and 65,859 for Ford’s Fusion sedan, according to the data cited by Honda.
Honda generally eschews fleet sales because they reduce resale values, particularly when rental-car companies resell used vehicles at deep discounts, Mendel said on a conference call today.
“It undermines your residual values,” Mendel said. “A sale is not a sale.”