By on October 24, 2010

Carmakers around the world are falling into each others arms faster than after a speed-dating session. Some are more promiscuous than an avowed wife swapper. What is Honda, the #2 in Japan, up to? Especially after seeing a 35 percent drop in October, and that may just be the beginning of it.  Are they looking for some corporate nookie? Or will they remain celibate? The Nikkei [sub] had an interview with Honda CEO Takanobu Ito. Here are his most salient points, without any comments.

  • “During the 10 or so years (until the collapse of General Motors), the automobile industry was in a sort of bubble. In that period, carmakers could enjoy sales growth even if they only kept doing the same old things unthinkingly.”
  • “Now, the business environment is completely different. Consumers have started refusing to buy products unless they clearly and definitely need them.”
  • “I don’t deny the benefits of a good partnership. But we believe what we should value the most is not our partners but our customers. Imagine two carmakers agreeing on mutual access to their dealer networks in a tie-up aimed at expanding their sales. Would their dealers really make serious efforts to sell cars of the other maker for which they feel no affection?”
  • “Honda will have no future as a large company. We will aim to become a “great smaller” company. ”
  • “Exchange rates are determined by the market moment by moment, and there is no point in our telling how much yen a dollar should be worth. What is important is how to manage currency risks. Honda has factories around the world, and they can supply vehicles to each other (to offset the effects of currency fluctuations).”
  • “If the yen remains strong, we should be able to take advantage of a strong yen by importing cars from our overseas plants.”
  • “Japan needs to have free trade agreements with its major trade partners. This is the direction Japan should go. A policy response to the yen’s strength is necessary, but what we want to see more than anything else is free trade agreements.”
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43 Comments on “Honda To Become Greater And Smaller...”


  • avatar
    HerrKaLeun

    Would their dealers really make serious efforts to sell cars of the other maker for which they feel no affection?”
     
    I think the dealer will sell anything they get commission on.right now the same dealer has 2-4 brands. the same car sales man selling you a Honda today has no problem to tell you tomorrow that Kia is the best car if he swaps jobs. Most sales men don’t have any clue about cars to have affection. Affection for their commission maybe.

  • avatar
    Demetri

    But we believe what we should value the most is not our partners but our customers.
     
    If that were true, then the S2000, CRX, Prelude, NSX, and Integra/RSX wouldn’t all be dead now, and the CRZ wouldn’t be hybrid only.

    • 0 avatar
      Jacob

      It seems like the Honda of the 90s and early 2000 that used to build exciting cars with cult following no longer exists. It is time for the fans to move on.

    • 0 avatar
      psarhjinian

      Honda, the purveyor of CR-Vs, Accords and Pilots, sells way, way more cars than Honda, the purveyor of Integras and CRXs and Preludes.
       
      I think Honda understands Honda’s customers better than enthusiasts think they do.

      The customer doesn’t care about GDI, the customer doesn’t car about a proper AWD system. The customer doesn’t really care which wheels are doing the driving, how many gears are in the automatic transmission, or any one of the number of things that Honda gets pilloried for. What customers care about: is the care safe, is the car reasonably quick, does the car have good ergonomics, and—this is important—is that car statistically very reliable and cheap to own.

      On all these points, Honda still does very well. In many ways they don’t make very pretty cars, but that’s proven largely irrelevant: the cars aren’t shockingly ugly. If they have a fault, it’s that across the board their cars tend to be a little bit noisy, and that when it comes to niche vehicles they tend to lose focus. What they have not done, though, is make a core product that people do not want to buy because it costs them thousands and/or is egregiously bad.

    • 0 avatar
      ajla

      @Psar:

      does the car have good ergonomics…
      …On all these points, Honda still does very well.

      _____________
      Seriously?

      Maybe compared to the Zeta Camaro or 2003 7-series.
       

    • 0 avatar
      psarhjinian

      Ok, point to you there.  The ergonomics are okay, but not egregiously bad.  The Accord and it’s spawn are the worst offenders outside of Acura (lots of buttons, all too small) but they’re not actually troubling to use
       
      Toyota still does it better.

    • 0 avatar
      JimC

      Honda ergonomics?  To put it kindly, I thought the seats in the 2006+ Civic were nothing special.  Thigh support is pretty old hat and Honda simply didn’t bother to get it right with that car.

    • 0 avatar
      Demetri

      Is there any reason why Acura doesn’t have a model smaller than the midsize TSX?  The Integra was not a niche car; it sold quite well in its heyday.  They completely abandoned the market and their customer base for this car.
       
      They’re also not valuing the customer when it comes to the CRZ.  Almost everyone says the same thing.  Remove the hybrid system and sell it cheaper, or give it more power with or without the IMA.  They won’t do it because they’re too bullheaded in their new green agenda.  They don’t even have the guns to hang with the big dog on the hybrid front; IMA is not competitive with Toyota HSD.  So what are they doing?
       
      I’m not trying to be a Honda doomsayer.  The Civic, and Fit (why not sell the City here too?) are still very good.  I’m not a midsize driver, but the Accord still seems good and I actually like the styling.  I just think it’s bogus for him to say that they value their customers above all else, when they’ve abandoned so many models and their fans.  And when it comes to dollars and cents, I guarantee that a new Integra would sell better than the Insight, CRZ, Element, Ridgeline, ZDX, RDX, or RL.

  • avatar
    TrailerTrash

    Is this the same philosophy Mazda is thinking about?

    Many on TTAC always start planning auto maker funerals because they are not combining with others.
    This economics of scale is what I constantly read about from bloggers.
    Why can’t you have a small, quality company and survive?

    I remember when I read about Toyota’s drive and desire to become the world’s largest auto maker.
    Now it’s VW.

    What is it about the drive to be the largest!? Remember, lots of companies thrive being small, quality product companies.
    Who is larger, Ford or BMW?  Who has a better reputation for quality?
    Ford or Honda? Same question.

    Come on…size isn’t everything!
    At least I am trying to convince myself of this….

  • avatar
    forraymond

    Free trade into America, but tariffs out the ass going out of America.
     
    It’s time for FAIR TRADE NOT FREE TRADE.
     
    DAMN POLITICIANS – START LOOKING OUT FOR AMERICA, not just YOURSELVES.

  • avatar
    krhodes1

    I think the best example of “small is beautiful” is Morgan. They are tiny and profitable, and while their product is not cheap, it is not ludicrously expensive either – a Morgan is attainable. They have NEVER made thier own engines, instead buying them in from others. They are even doing some pretty state-of-the-art stuff these days.

    I think the death of TVR started when they decided to make thier own engines, they just did not have the resources.

    I think the new Saab will take a page out of Morgan’s book.

  • avatar
    Gardiner Westbound

    Local dealers disfranchised by the Detroit Three don’t seem to have experienced difficulty switching allegiance. Last year (insert name here) was the greatest. This year (insert name here) is better!

  • avatar
    tbp0701

    Interesting points.  On the “great smaller” comment, I happened to think the Honda could probably just become an engine design / build / supply company if it wanted and would likely do very well.

  • avatar
    ceipower

    The power people who run Honda today are short term  thinkers who have stripped the company of the very things that it still wants the public to believe it stands for. It’s smug-ness  will remain so long as Accord and Civic continue to be the cash cows they’ve been for so many years. Like Toyota , they seem to reply more and more on cost cutting over innovation. Honda has produced many duds in the last decade and this shows no signs of slowing down. How long can this continue? Quite a while I suspect. GM went strong for most of the last 30 years all the while building some of the poorest vehicles ever. Thank god for the Power of advertising!

  • avatar
    L'avventura

    FTA is the keyword here.
     
    Its no coincidence that Honda, Nissan, Toyota, amongst others are setting up factories in Thailand.  Its because of the Japan-Thai FTA agreement, and AJCAP (ASEAN-Japan FTA), means tariff free import of Thai-made products into Japan.
     
    We are going to see a MASSIVE flood of Japanese manufacturers move production from China into South-East Asia as FTA agreements come into full effect and labor wages in China increase.  More importantly, it means no tariffs, less political risks, and larger margins.  Just as importantly , CAFTA, China-ASEAN FTA zone makes it ideal for exporting South-East Asian made products into China as domestic market as it grows.
     
    Japanese automakers have been moving into a large-scale highly-distributed global production supply chain network, and not centralizing production in one country or one currency.  In this regard the strong yen is going to become a very strong asset as it allows them to expand and acquire more cheaply and rapidly.
     
    The momentum of ASEAN nations signing FTA agreements is something to keep an eye on.  They will become a trade proxies for many companies.  EU-US-Japan FTA is unnecessary.  Ford can sell tariff-free cars in Japan made in South East Asia, Nissan can sell tariff free Micras to Europe via Thailand.
     
    But it also means that ASEAN nations + FTAs is a serious risk for China’s manufacturing hegemony.

  • avatar
    gslippy

    These are the excuses of a company that has failed to keep up with its competitors, and whose Acura division is producing some of the ugliest, most pointless cars on the market today.

    Sure, Honda might survive as a ‘greater and smaller’ company, but only because they’ve squandered numerous opportunities to capitalize on their past successes.

    They could become another Mazda.

  • avatar
    thornmark

    Last time I looked Honda was Japan’s most profitable automaker.  Edmunds regularly finds Hondas, though not bargain priced, have the lowest “true cost to own”.

    That said, there is no Honda model that I find attractive enough to buy.  And that goes for all the other makers too.

    Honda needs to focus on cars and get its mojo back.  Honda, show your brilliance in cars and stop the diversions into advanced jets and robots, Hyundai’s moves show you can’t rest on your automotive laurels anymore.

    • 0 avatar
      Sugarbrie

      How can Honda have the lowest true cost to own when their transmissions self-destruct soon after passing 100,000 miles??   Is it because Edmunds only measures cost up the point just before the Honda transmission dies?
       
      Yes Honda owners are loyal.   Every Honda my parents and sister have owned (five) have had the transmissions blow up.  They replaced those cars with another Honda.

      Is Honda profitable because they are spending nothing on product development and only focusing on short term cost cutting. Being profitable is not a sign of quality. McDonalds and Walmart are very profitable.

    • 0 avatar
      psarhjinian

      How can Honda have the lowest true cost to own when their transmissions self-destruct soon after passing 100,000 miles

      Just a correction: this was only a problem on V6 equipped cars between 2000 and 2004.  It wasn’t the case before or since.

    • 0 avatar
      ajla

       
      How can Honda have the lowest true cost to own when their transmissions self-destruct soon after passing 100,000 miles??
       
      Because every single other automaker has at least some models with the same thing happening on their transmissions.
       

    • 0 avatar
      Patrickj

      @ajla
      I have to agree that all automakers have their failures in automatic transmissions for powerful FWD cars.  They are far from perfected.

    • 0 avatar
      gslippy

      @Sugarbrie: My first and only Honda (05 Odyssey) was a lemon, and my cost of ownership was devastatingly high.  I know I’m the exception, but it will be a very long time before I buy another Honda.

    • 0 avatar
      John Horner

      A lot of people got burned by the Odyssey, particularly for automatic transmission failures. The customer expectation is that a maintained Honda will go 200k miles without a major component failure. For many years the vast majority of Hondas met that expectation. But, show me an Odyssey with 200k miles on its original transmission and I will be stunned.
      My guess is that Honda put a transmission in the Odyssey which was just barely up to the task in an Accord. Putting passenger car components to van duty is asking for trouble. People routinely will pile 4-7 people plus their luggage in a minivan and hit the road. You need a stout drive-line to handle that load.
       

  • avatar
    ciddyguy

    I have always loved Honda cars, especially their early products and even owned 2 of them myself and my parents owned several of them as well but the last Honda my Mom had was a 1997 Honda Accord she bought lightly used and kept until 2005. The biggest thing was it was just a bit too low for her to get into and out of easily due to arthritis in her lower back and today drives a 2004 Dodge Stratus.
     
    I was not as impressed by that last Honda as I was of earlier models they had, a ’76 3 door hatch, bought new, an ’85 SE-I 4 door bought when 2 years old and a 1990 EX 4 door bought new and I owned an ’83 Civic for 6 years between 1992-1998 and then inherited my Dad’s 88 Accord LX-I 4 door from ’98-2006 but all of the others were great cars, most especially that Civic, small, nimble and a hoot to drive, the 88 Accord was fun too, but not quite as nimble as the Civic was and I had friends who owned a well used ’78 Civic and even it was fine in the back as I rode in it from Tacoma to Seattle on several occasions (about an hours drive) and they all but drove the wheels off of it in a short period of time, selling it when they had to move away to the East coast for a couple of years.
     
    But looking at their product line now, other than the Fit and it isn’t nearly as sporty to drive as it is practical, I don’t like much of the rest, the Element comes close, but is out of my price bracket new. Sadly, they let the Civic grow and become bloated, the Accord as well and neither of them are nice looking anymore.
     
    I do think they need to return to their core, by first looking at what they produced in the past and utilizing the best elements of those past models to make/redesign new ones and please, let’s return the Integra, especially all of the hallmarks of the first gen iteration, which was really a glorified Civic with the styling cues of the Accord and it was such a smart looking car back in the day and I wished my Dad had been able to to have bought one as we did look at them once.
     
     

    • 0 avatar
      aspade

      So you love Hondas.  But you last bought a new Honda over 20 years ago and the Hondas you loved were 10-15 year old beaters.
       
      That is exactly why Honda ran away from that “core” and will never look back.  Because there’s no money in building new cars for people who want cheap used cars.

    • 0 avatar
      ciddyguy

      Aspade,
       
      Let me explain, I’ve never been ABLE to buy a new car, no matter the brand, I hope to be able to buy my first new one in the coming year. One of the cars on my short list is the new Fit, and I like it, a lot, but it just doesn’t feel as sporty as I’d like it to be (the old Civic had much better driving dynamics) and have loved the Civic until they began phasing out the wagon, then the hatch and blew it up to the compact that it is now so unless I go used and can find an Element in good shape used at what I’m willing to spend or pick up a Fit, the rest of the line up really doesn’t appeal to me AT ALL.
       
      I see a lot of Hondas, especially Civics, Accords and Elements but all models around Seattle, they remain popular, but if I don’t like where they are going stylistically etc, then I’m not going to buy, new or used. Period, it saddens me to see this from a company who made good quality cars and with mom’s former 1997 Accord EX, I was a bit disappointed in the not so subtle downgrading of materials etc, the dash plastics just didn’t match up as nicely as in early versions etc, even the sound system got downgraded in performance to some degree as well, just was not as impressed even though I like that generation’s general styling.
       
      So in essence, I’ve driven my parent’s 1990 Accord (which they bought new) and mom’s 97 accord (which she bought about 2 years old to replace a Chrysler Concorde that was just too big for her after my Dad died and deliberately went back to Honda but found it too low to get in and out of easily as she got older and stiffer.
       
      So unless they do a major redesign or I decide that the Fit is really what I want for my next car, then I’ll go to Honda, otherwise, it’ll be somebody else, like perhaps the Ford Fiesta or something along those lines instead.
       
       

  • avatar
    daga

    I’m pretty sure he means “Greater than the big companies and Smaller than the big companies”, not smaller than he is today.

  • avatar
    CarPerson

    Honda has no problem pushing out cars with drum brakes on the rear.
     
    Honda has no problem selling 50% antifreeze at $19/gal when many of their vehicles take 5 to 5.5 qts. How about offering it in 3qt containers (I’ll take two, thank you.) to minimize boneheads dumping the excess where it can do maximum damage?

  • avatar
    Davekaybsc

    Hondas used to be at least reasonably attractive. They used to be fun, and they used to have brilliant ergonomics. Most importantly though, Honda was out in front with advanced, efficient engines, and you could of course expect a Honda automatic transmission to last a reasonable amount of time.

    All of that is over. Their cars are bloated and ugly, they’re boring, the ergonomics are terrible with 10,000 buttons plastered everywhere with no rhyme or reason, and they are getting crushed in the engine department by companies like Ford and Hyundai. How did that happen? Ford, the company that used the 3.0L duratec in its cars for about 10,000 years,  has way more advanced engines than Honda. Ford has plenty of 6-speed automatics too, while it took Honda until 2010 to release their first 6-speed. Fingers crossed these don’t explode!

    Honda should change their slogan to the power of coasting on your badge and past glories.

  • avatar
    GS650G

    Honda makes great bikes and lawnmowers still.

    • 0 avatar
      Zombo

      Great motorcycles ? Not really , if you read the bike forums and talk to motorcyclists Honda bikes are dull , overpriced , and the company isn’t giving them the bikes they want . They have misread the motorcycling public worse than the automotive enthusiasts in the U.S. and are rarely on the top ten bike list of any bike mag save for the Gold Wing . Just read some of the comments under the article in the link below .
       
      http://www.motorcycledaily.com/2010/10/2010-honda-nt700v-md-ride-review/comment-page-1/#comments
       
       

    • 0 avatar
      hakata

      Honda’s North American motorcycle offerings stink. They are absolutely soulless and reek of accounting decisions. God bless them for still making parts for my ’70s CBs but they have given up all serious credibility here.

    • 0 avatar
      Zombo

      Yes with no adventure bike , standard (naked bike) , competition enduro , midsize supermotard , and other bikes even being offered in the U.S. market Honda motorcycles have become irrelevant in this country to motorcyclists that used to be hard core Honda fans . It’s sad to see .

  • avatar
    John Horner

    Honda seems to have completely lost the plot. They left certain products to rot on the vine like the S2000, NSX, Element and Pilot in a manner which would make the Old Ford proud. Meanwhile, the product Honda has redesigned often turn out to be a step backwards. Meanwhile, they have put a face on Acura only a bling deprived teenager might find attractive on a luxury vehicle. Honda was once a hybrid leader, but now is a flailing also-ran. Meanwhile, they are spending money trying to build a small jet airplane (the Honda Jet).
    Sad, so sad.

    • 0 avatar
      geeber

      The NSX, S2000, and Element, okay…but the Pilot? Honda just released an all-new one last year.

      And please note that the NSX, S2000 and Element are niche products. Honda has not allowed the Fit, Civic, Accord or CR-V to rot on the vine. Ford allowed key products – old Taurus, Focus and Mustang – to grow long in the tooth.

  • avatar
    PartsUnknown

    I just bought a 2010 Accord LX with 5 speed manual after a steady diet of mostly European cars over the years.  I am no Honda fanboy, but overall the Accord is a pretty impressive car. 

    It does have its paradoxes however.  After living with it for the past 7 months, the Accord is a high quality piece, much more so than the Malibu, Fusion and Camry that I compared it to.  But consider: it has a headliner material fit for a Bentley, but the floormats are the cheapest ones I have ever encountered.  In 5600 miles of daily commuting, they have worn through to the backing already (and I’m not wearing hockey skates to work either).  The car has a reassuring stoutness to all of its components and exceptional interior quality, but the front left fender is misaligned, causing an uneven gap between it and the hood.  Interior plastics are high quality, but the seat material on the sides of the seats is that disturbing “mouse fur” stuff that seems out of place, even in the LX.

    These and other content specific curiosities (the hefty damped lid for the center cupholders belongs in MOMA – but no lining for the trunk lid?)

    One thing is for sure – the Accord is fun to drive (relatively speaking of course), especially with a manual.  Every time I hear “the Accord is bloated!!”, i have to laugh, because at 3200 pounds, not only is it just 50 pounds heavier than its predecessor, it’s the lightest car in its class.  Double-wishbone front suspension, multi-link rear, 7,000 rpm on an engine that is happy to go there all day, seats that would be “sport seats” in another car, small diameter steering wheel, terrific steering feel – it’s all there in that dull wrapper.

    Overall, I’m pleased with the car, and I’m sure it will be dead reliable and durable as it has been so far.  It’s fun-to-drive quotient is satisfying for a commuter.  But, the missteps, while not earth shattering, are surprising for a Honda.  Not quite up to the standard I was expecting.  It will be interesting to see in what direction the company goes.

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