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Honda Chief Steps Down, Replaced by Low-Profile Engineer

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Honda Motor Co on Monday named an experienced, yet little known, engineer as its new chief executive, who will take over in late-June with the Japanese automaker battling the fallout from a slew of recalls that have shaken its reputation for quality.

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Takahiro Hachigo, 55, joined Honda in 1982 and has worked across research and development, procurement and manufacturing, with spells in the United States, Britain and China, where he is currently a senior official at the R&D arm.

He will replace Takanobu Ito, who is stepping down after six years in the post that saw Honda struggle through the global financial crisis, natural disasters and the more recent damaging recalls.

Ito and other executives took a pay cut in October following a fifth recall in a year of the re-engineered Fit hybrid subcompact, [ID:nL3N0SI29A] and Honda last month trimmed its core annual profit forecast as it set aside hundreds of millions of dollars to cover mass recalls to replace air bag inflators made by Takata Corp <7312.T> that have been linked to six deaths, all in Honda cars. [ID:nL4N0V9182]

Ito conceded this month that the Fit quality glitches could have been caused at least in part by an aggressive sales target. [ID:nL4N0VN60P]

At a brief news conference in Tokyo, Ito and Hachigo spoke little of Honda's recent missteps, instead saying the groundwork had been laid to take the automaker forward after moves to make its six operational regions self-reliant and accountable.

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Hachigo, who worked on the popular U.S. Odyssey minivan and CR-V crossover, skips several ranks in his promotion to CEO, but Ito said his broad experience made him the ideal candidate. "I felt this was the right timing for us to boost efficiency and results globally," Ito, 61, told reporters.

Hachigo's appointment marks the first time Honda has named as CEO a non-director and someone who has not headed the firm's R&D company. "My job is to take the (current) strategy forward, and evolve it," Hachigo said.

HACHIGO FOR HARMONY

For the past three years, Ito, a feisty former supercar engineer, has shaken up Honda's decades-old, tightly knit supply chain, seeking to trim costs and find more cutting-edge technologies. That has rankled local suppliers, and some retired Honda executives manoeuvred to have Ito removed, sources have told Reuters. [ID:nL4N0VG54N]

"I think this is an attempt by Honda to tread a different course, with someone who upholds harmony," said Takaki Nakanishi, a veteran auto analyst and CEO of Nakanishi Research Institute.

"I don't know anyone who has anything bad to say about him," said one senior Honda executive, speaking on condition of anonymity. He described Hachigo as "nice" and "thoughtful".

Ito became CEO in 2009 as the auto industry was licking its wounds from a crushing global financial crisis. The years that followed were no easier, as a disappointing launch of the Civic model caused many to question whether Honda had lost its edge. Natural disasters in Japan and Thailand also hit production and profits hard.

Ito will remain on the board and become an adviser to Honda.

Honda also said Koichi Fukuo, a senior managing officer tasked with overseeing quality after the recalls, would take over as R&D chief from Yoshiharu Yamamoto who is retiring.

(Additional reporting by Norihiko Shirouzu; Editing by Ian Geoghegan)