Nikkei: Honda's Future Hinges On A Kei Car
We have been saying for quite a while that Honda looks a bit pale around the nose. The Nikkei [sub] agrees. According to the Tokyo business paper, Honda blew it by relying too much on the U.S. market, by ignoring the emerging markets, and by disregarding the fact that Japan has a love affair with 0.6 liter midget-mobiles, a.k.a. kei cars. All of this has to change in a hurry, and Honda’s turn-around hinges on the success of a new kei car, the N Box. Says The Nikkei:
“While it is true that last year’s quake and the floods in Thailand dealt a blow, the carmaker has deeper structural problems. Honda let its success in selling expensive cars in the North American market go to its head, failing to notice changes in the global auto market. As other major carmakers shifted their strategic focus to emerging markets after the 2008 financial crisis, Honda saw its competitiveness wane and it was overtaken by South Korean rival Hyundai.”
“This is also apparent in the minicar segment. As it focused resources on its North American operations, Honda’s minicar engineering team was stretched too thin. Now minicars account for roughly 40% of the domestic market and Honda has taken a beating in the segment, tumbling to fourth place behind Nissan.”
On the kei car front, Honda’s counter attack looks promising. End of last year, Honda introduced the N Box, and Honda still can’t make it as fast as it sells. There is a two month wait for an N Box.
For the car, Honda revamped its production process for the first time in 10 years. Instead of the traditional monocoque method, an inner frame is built, and outer panels are welded on afterwards. This new process had teething problems, which delayed delivery. Now, Honda says it has mastered the production of N Boxes.
Mastering success in emerging markets will take a little longer.
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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"Now minicars account for roughly 40% of the domestic market and Honda has taken a beating in the segment, tumbling to fourth place behind Nissan." Come to think of it, Nissan sells badge engineered kei cars built by Suzuki and Mitsubishi, and still manages to outsell Honda. This N Box is quite interesting as it is also a platform on which Honda can build any variation on the keicar theme at less expense.
BTW, you know who does well in kei cars? Mitsubishi! No, seriously.