Honda Motor Co. said Monday that it would replace its president in June, turning to a 55-year-old engineer to lead Japan's second largest automaker through the deepening auto industry crisis.
The management shake-up marks the end of the six-year leadership of Takeo Fukui, 64, who is retiring having won plaudits for keeping Honda in profit at a time when other major Japanese automakers are into the red.
Senior managing director Takanobu Ito, who currently oversees Honda's automobile operations, will take over as president and chief executive at a crucial time as car sales slump because of the global economic downturn.
Fukui, who will remain an advisor to Honda, said he had initially hesitated at handing over the reins in the midst of the auto industry crisis.
"But when I thought of the company's growth potential after overcoming these tough times, I decided it was better to make the change now rather than later," he told a news conference.
"For the company to continue, it is very important to have a generational change," he said.
Fukui had been widely expected to step down at some point soon because of his age and analysts gave high marks to his performance.
"Honda's profitability amid the global downturn can be attributed to Fukui," said Tairiku Sakaguchi, an auto analyst at Shinko Securities.
"While other automakers around the world are being hit by the slump, his ability to preserve profitability is praiseworthy," Sakaguchi said.
Honda, however, has not been immune to the industry's woes. The company's net profit dived 89 percent in the October-December quarter and it plans to dramatically reduce production.
Ito, who joined Honda in 1978 as an engineer in research and development, said Honda needed to make vehicles that people dream about, blaming 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.
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.
The group said last week that British tycoon Richard Branson's Virgin Group was among the potential buyers of its F1 team.
Honda is not the only Japanese automaker changing its head during the deepening industry crisis. Toyota Motor last month named Akio Toyoda, the 52-year-old grandson of its founder, as its new president.
Automakers around the world have been hit hard by slumping demand as rising unemployment and a credit crunch deter people from buying cars.
Japanese carmakers have not been immune to the downturn, although they remain in better shape than their US rivals such as General Motors and Ford.
The Japanese car market was already weak before the global economic crisis erupted, because of sluggish consumer spending and signs that many young people here appear to be losing interest in owning a car.