The Truth About Honda's U.S. Success

Andrew Dederer
by Andrew Dederer
the truth about hondas u s success

With Chrysler’s slide well underway, it’s only a matter of time before Honda becomes America’s fourth largest automaker (behind Toyota, GM and Ford). Honda will then hold the same rank stateside as it occupies in Japan– behind Toyota, Nissan, and Suzuki. While Honda’s relative success in its home territory may surprise some American industry watchers, the automaker’s contrasting strategy in the Japanese Domestic Market (JDM) reveals a hidden “secret” to their U.S. success.

The outlines of the Japanese car market are simple enough. Toyota OWNS the JDM, with a 50 percent market share (GM at its 1960 level). Many automakers have tried to go head-to-head with ToMoCo. Mazda tried; Ford had to take over to bail them out. Nissan has been chasing ToMoCo for over 50 years. It almost killed them. Honda was Japan’s number two at that point. But once Renault got Nissan back in shape, Honda faded back to third (and recently fourth).

It should be remembered that Honda is Japan’s new kid on the block. Taking the top slot at home simply doesn’t hold the same thrill for them as it does for their older rivals (the motorcycle market is another matter.) Considering what has happened to the challengers, it’s probably a sensible decision.

At the moment, the total Japanese market accounts for 3.2m units a year, equivalent to around 20 percent of total U.S. production. Honda's share: somewhere between 500k and 1m. It’s the breadth of Honda’s JDM lineup that's the most interesting aspect of its home market. Honda sells three sizes of Minivan, Kei-cars with engines that would embarrass motorcycles, station wagons, sedans, compacts, crossovers, you name it.

Honda Japan offers most of the models familiar to North American buyers, but often in strange configurations (e.g. all-wheel drive Odyssey minivans and Civic sedans and hatchbacks). Only the Pilot is notable by its absence; the boxier and cheaper (than the CR-V) three-row “Crossroad” serves in its stead.

In stark contrast, the most interesting thing about Honda’s North American offerings is what the brand doesn’t offer. Compared to most of its competition, Honda is missing several sizes of vehicle. Other car companies moving the metal in The Land of the Free sell four sizes of car. Honda has three. Other makers have two kinds of two-row S/CUVs. Honda has one (in three varieties). Even little Mazda has three different mini-vans. Honda NA has one.

A glance at Honda’s oversea website shows that the Japanese automaker produces the vehicles it needs to match the competition, model-for-model. So why hasn’t Honda they brought reinforcements from the land of the horse chestnuts? The answer lies within Honda NA’s option lists.

As far as conventional options go, Honda follows the classic “Japanese import” option path. Every model has two or three basic trims that differ mostly in terms of cosmetic and “convenience” items (CD-changers, moon roofs, alloy wheels etc.). Electronic Stability Control (ESC) is standard across most of the range. Honda's only real “factory” options are satellite navigation and driven wheels (2WD/AWD for the S/CUVs).

The CR-V, Honda’s perennially popular CUV slash wagon, is available in two-and-a-half trims, plus a pair of “niche-y” cousins. They all come with the same four-cylinder engine (Acura gets a turbo-charger) and two rows of seats. Almost all its rivals offer a V6 engine; several (including Toyota), and provide an optional third row. Despite this supposed deficit, the Honda CR-V has outsold the Toyota RAV-4 for a decade, and looks to be thriving in a bad market (sales on target for 200k).

Minivans? Same deal. Toyota will sell you an AWD mini-van, Honda NA doesn’t. And yet the Odyssey out-sells the Sienna.

This lack of choice is the "secret" key to Honda's success. And it's aimed– rightly– at Honda dealers, rather than the brand’s U.S. customers. By limiting options, Honda keeps it dealers focused on making volume sales, rather than gorging on limited editions. Keeping the models distinct also prevents new vehicles from eating the old. Witness what the Nissan Rogue is doing to the Murano.

Honda’s policy points up its strength (premium prices) and weakness (lack of capacity) in the NA market. Honda sells vehicles that use either 80 to 90 percent or 10 to 20 percent of their production line’s capacity. There is little “sharing.” Filtering in additional models and variants would increase sales, but it would take a larger percentage of capacity (flexible manufacturing or no).

Honda’s is not the only formula for success in NA. BMW makes plenty of profits by selling dozens of variants of a handful of platforms, with expensive options aplenty. But then, the Bavarians play at a different price point. Selling generic (if loaded) vehicles works well in the American mass market. And no one seems quite as focused on that task as Honda, regardless of their market share here, or at home.

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2 of 61 comments
  • No_slushbox No_slushbox on Aug 22, 2008
    Axel What does a Civic owner step up to? An Si? The civic is a pretty reasonably sized car (it has the longest wheelbase of the compacts), so maybe it can cover both the compact and smaller-medium classes.

  • Jurisb Jurisb on Aug 24, 2008

    when you take your middle finger and can`t stick it in between any panels within or out of honda Accord, when you close the door with smacking tasty sound and being inside can`t hear your dog or wife barking outside, when the hood of your accord grows over with spiderwebs and you can`t remember where the hood release handle is, know this is the answer , the real answer to Hondas success.

  • Irvingklaws Gas station coffee (which is usually pretty good these days) and a small bag of chips/nuts/pretzels to help stay alert. Sometimes bring a Gatorade because it doesn't seem to make me need to use the restroom as much as water or soda. Maybe stop McD's or BK for something to-go if I actually get hungry. Nothing fancy. I'll eat better when I get where I'm going 🙂
  • Legacygt There is nothing "trapezoidish" about that grill.
  • Ltcmgm78 I think cars need an AM/FM radio for emergency notifications. Driving at night, I will scan the AM frequency just to see what comes up and to be amazed at the different cities I can get after dark. My SAAB had a Euro-spec radio and I could get long-wave (lower freq than the AM band) and found lots of interesting listening.
  • Golden2husky You'd be way better off in a base Vette for that money.
  • Gene Sedans and coupes don't sell in the quantity that they used to but they still make up a significant market. Why Ford abandoned this segment still baffles me. Again, just look at Toyota, Dodge, Mercedes, BMW, Hyundai, etc who have not abandoned this segment.