Immediately after issuing that declaration, however, the circumstances surrounding Honda suddenly changed for the worse. The company was faced by an unparalleled management crisis.
Kihachiro Kawashima recollects the hardships of this period:
"I think Mr. Fujisawa was really in love with the Juno, saying 'This is a revolutionary scooter. It's bound to have huge sales. Let's line up the dealers and have them send us guaranty money.' He was very upbeat. The guaranty money was three million yen, I think. Some dealers said it was too much, and asked us to reduce it to half. Then, though, we found out that the Juno was a splendid failure. The advance publicity had been pretty flamboyant, so we had a terrible time making a recovery.
"Then, on top of that, sales of the Cub F-Type screeched to a halt. For one thing, the customers' interest was shifting to products from other companies that were catching up to us, and for another, auxiliary engines for bicycles were starting to seem out-of-date. Bad things come together, so the Dream, which had been selling so well, started having problems. In December of the year before, we had increased the displacement of the Dream 4E-Type to 220 cc. We put it on the market, and started getting one complaint after another about engine problems of unknown origins. On top of that again, the Benly also got a bad reputation for noisy gears and tappets. The sales office fell into an awful state with disaster in every direction."
Each of the company's four mainstay products developed problems during the very same period of time.
The unexplained problem with the Juno K-Type turned out to have several causes. Its engine was completely enclosed by FRP, which is not good at dissipating heat, so the poor cooling caused it to overheat frequently. The FRP body had been intended to reduce weight, but it turned out to be heavier than expected. That and the deluxe features brought the machine's weight to 170 kg, making handling difficult. Moreover, it was underpowered at that weight, so it didn't provide a good ride. The cantilevered suspension that was intended to make changing tires easier also had problems. The clutch operated in the same way as on a motorcycle, and scooter users who were accustomed to the easier operation of the centrifugal clutch and the V belt did not like it.
Honda's scheduled trip to Europe in April was canceled. He had to devote himself immediately to finding solutions to the engineering problems.
Fujisawa, for his part, worked out measures to redress the sales problem. In August of the previous year, the regulations governing the 4-stroke engine displacement of light motorcycles had been extended from 150 cc to 250 cc. Therefore, the main thrust of production was directed to the 220 cc Dream 4E-Type. For the time being, the only product that seemed likely to help Honda through this crisis was the 189 cc Dream 6E-Type, which had been developed as the successor to the 146 cc Dream 3E.
Mr. Honda and the engineers were having difficulty tracking down the cause of the troubles with the 4E. When the machine slowed down, the idle grew rough and caused the engine to stall. Sleepless days and nights continued until they identified the source of the problem.
On April 20, Fujisawa went to the Saitama Factory, where he gathered all the employees together and explained the company crisis to them frankly. He asked their cooperation in taking emergency measures. Until the problem was resolved, 4E sales would cease, he told them, and they would have to try to make that up through increased production of the 6E. The workers' union accepted this. Giving up their long May holidays, labor and management would unite in the tough struggle that lay ahead.
Noboru Horikoshi had just joined the Saitama Factory as a body assembly worker. He recalls this period as follows:
"Around that time, the shipping area at the factory had rows after rows of Dream 4Es lined up. They were on our inventory both because of the halted shipping and the machines sent back from all over Japan. One day, somebody told us all to gather together. I went, and there were Mr. Honda and Mr. Fujisawa standing side by side. The Old Man's white uniform was dirty and very wrinkled. His eyes were all bloodshot. Then, after Mr. Fujisawa explained the emergency situation, the Old Man talked to us. He didn't tell any jokes, as he usually did, and he didn't say anything about aiming for the world, either. He explained just what had gone wrong with the 4E. It seemed that the problem was in the carburetor. There was something wrong with the design of the carburetor and how it was installed, so the fuel flow was cut off and the engine would stall. But he said they finally saw a way they might fix it. The Old Man apologized to us. He said, 'I'm really sorry about this. I've really caused you trouble.' At that point, it really got to me."
The emergency increase in production of 6Es that began on April 20 was halted less than a month later, on May 8. The engineers headed out to all parts of the country to change the carburetor settings on every Dream 4E in Japan.
This did not, however, mean that the crisis was over.