Honda needs to get its mojo back

[Variance]

Honda needs to get its mojo back

Can the automaker recapture its innovative spirit?

James B. Treece

Automotive News / February 27, 2006 - 6:00 am

TOKYO -- Can Honda Motor Co. get its mojo back?

From 1995 to 2000, Honda was the hottest, most innovative Japanese carmaker. A string of hits, led by the Odyssey minivan and CR-V car-based small SUV, set Honda apart.

Toyota Motor Corp. responded by copying Honda's ideas and designs. Nissan Motor Co., Mitsubishi Motors Corp. and Mazda Motor Corp. were left in the dust.

Honda's reputation then was reminiscent of Sony Corp.'s in its glory days. Sony didn't unveil a trendsetting Walkman every year. But it came up with innovative hits just often enough to earn a premium image as an innovator and to charge premium prices. Ditto Honda.

Like Sony, though, Honda hasn't had a trendsetting hit in five years. Its hybrid Insight coupe, Accord Hybrid sedan and Pilot SUV broke ground in their own ways, but all missed the mark. Consumers received them with as much enthusiasm as they gave to Sony's answer to the iPod.

No Ridgeline premium

To be sure, Honda hasn't stumbled completely. In January, it received an unprecedented accolade when the Civic sedan and Ridgeline pickup were named North American Car and Truck of the Year. But consumer reaction to the Ridgeline shows just how far the Honda brand has fallen.

It is a genuinely innovative truck. But when Honda tried to charge the sort of hefty premium price that the Honda brand once commanded, customers refused to pay it.

Japan's Shukan Diamond magazine recently asked its readers to identify each carmaker's leading technology. They cited the Prius hybrid car as Toyota's and the Skyline GT-R sports car as Nissan's. For Honda, they pointed to its F1 racing program and Asimo humanoid robot. Neither is sold to consumers.

What went wrong? For one thing, Honda lost the hunger that drove it to take risks.

In the early 1990s, Honda was hurting. Mitsubishi and others were eating its lunch. Nobuhiko Kawamoto, named president in 1990, watched sales in Japan slide from 686,570 in 1990 to 549,112 in 1994. To motivate the troops, he issued a challenge: sell a record 800,000 cars in Japan by 1997. Stock market analysts all but laughed in his face.

Honda's dictator

Kawamoto prodded his product planners, designers and engineers to come up with exciting new cars. They did and met the challenge.

In the process, though, Kawamoto drove Honda like a dictator. He took over much of the decision-making himself. Other top managers didn't build that risk-taking experience.

When Kawamoto stepped down as president in 1998, the succeeding managers were not well-primed for the job. Honda had to relearn how to make decisions and lost momentum.

In addition, Honda's expanded lineup changed the company significantly. When Honda's lineup consisted essentially of the Accord, Civic, Prelude and derivations of those models (including the Acura versions), it was easy for a CR-V to stand out. But now Honda's product-development resources are spread out over a range that includes the Honda Pilot and Element and Acura MDX light trucks, as well as completely different platforms for the U.S. and European Civics.

In Japan, Honda has tried to carve out increasingly narrow niches in the minivan segment. Honda's Japan-market minivan lineup now includes the Elysion, Odyssey, StepWGN, Stream, Edix, Mobilio and Lagreat.

Playing it safe

With the innovators seeking to find the Next Great Minivan, Honda's other product planners all too often played it safe. For instance, they aimed the 2000 Civic at the families who bought it as a commuter car. In the process, they alienated the trendsetting California tuner market.

Honda needs its mojo back. It is too small a company to compete with the big boys otherwise. It has neither the low costs of a Toyota nor the niche-market margins of a Porsche AG. It needs to stand out and to have its brand stand for something. It has a history of exciting innovations, and it needs to get back to that tradition.

Although the Ridgeline hasn't clicked with customers, it at least shows that Honda CEO Takeo Fukui has his company thinking outside the box again. And a recent shakeup of Honda R&D Co., its product development operations, should keep the car teams from being distracted by Honda's other research areas. Still, Fukui needs to step it up a notch if Honda is to be the Honda of old.

Link: http://www.autonews.com/apps/pbcs.dll/arti...6/1003&refsect=

[Flybrian]

I would qualify the second-generation Odyssey as a hit, but certainly not the first. No one wanted small tall wagons.

Also, its true that Honda has no real iconic product. Demostrators like Asimo are complete wastes of time and not much more than tradeshow attractions for most people.

[regfootball]

i hate sony and i hate civics. the civic of all gen's is one of the most overrated cars.

[siegen]

the civic of all gen's is one of the most overrated cars.

Care to explain?

My last Civic was definately overpriced, the dealer wanted $7,000 for a Black '93 EX Coupe with 147k miles on it (this was about 4 years ago). I got them down to 5k out the door. It seemed a little high and I could understand how people would think that it's overrated, but that car didn't give me a single problem during the year (and 9k miles) I drove it. Great fuel economy, quick (5sp), and nice looking. I romped on it quite a bit as well. After owning one, I can definately say they aren't over-rated, although I haven't driven a new one (or a 7th gen for that matter, the 2001-2005 model). Compared to my Regal and Escort, both of lower miles, the Civic was hands down a better car, in every possible way (unless you like bench seats).

[Petra]

I can see Honda slowly turning into present-day VW over the course of the next decade or so.

[z28luvr01]

It needs to stand out and to have its brand stand for something.

This is something I've been saying for a long time abot Honda. They've lost their focus, and it shows in their product mix, their marketing, and their salespeople. Half the company wants to appeal to the tuners, and half wants to appeal to grown-ups. Hell, that dichotomy exists entirely within the S2000. It's priced such that older people with disposable income can afford it, yet it has an engine that - in the real world - is only relevant when tuners get into HP/liter discussions.

[regfootball]

since Acura has existed, I think its watered down honda's brand equity and they haven't done anything with Acura to make it a credible brand vs. Infinit, Lexus, MB, BMW, Audi.

it basically highlights the problem that Gm has always faced and now honda and toyota will have to face up to.

Having your image so dependent on st@rcher culture and fast and furious stuff waters down the brand too. No adult with kids wants to drive the same car that some dork has a fart can muffler and bright green paint on. Oh, and i forgot the 2 foot high 'aircraft aluminum' spoiler. Tell me those doinks don't destroy the brand.

You want to expand and soon find out you need more than one brand and several more models.

So all of a sudden, each additional model puts you under increased scrutiny. If you survive that, you ultimately have to feed the monster with more models and some of them are iffy (Ridgeline) and you soon find out being all things to all people is not that easy. And it ends up diluting your product line, just by default. At least in the perception eyes of the public. I mean, do you see Eddie bauer making biker wear?

it will catch up with them over time.........what we see with honda are the seeds of its growth being a strain and the fact that toyota is going balls out for every segment and honda is not.

Right now we have a phase where a large chunk of our carbuyers are buying hoyotahonda for the first time. time will tell how many of those customers will be so enomored with those cars like the original hard core die hard hoyotahonda fans. And as more folks buy those brands, look at how many more trips to service will get talked about around the watercooler. It will be at that point where the urban legends that have created about hoyotahonda will start to become destroyed. Lots of olks are expecting that they will never have to get this car fixed. When the stories start rolling in about how yes, you do need to fix hondas and toyotas too, the legend (no pun inteded) will start to come down to reality.

Edited March 2, 2006 by regfootball

[siegen]

Having your image so dependent on st@rcher culture and fast and furious stuff waters down the brand too. No adult with kids wants to drive the same car that some dork has a fart can muffler and bright green paint on. Oh, and i forgot the 2 foot high 'aircraft aluminum' spoiler. Tell me those doinks don't destroy the brand.

That bright green painted car was a Mitsubishi (if you are referring to the F&F). I think Hollywood spotlight on highly modified cars has been pretty well spread between a lot of brands, not just Honda. And just because a Honda Civic or Acura Integra/RSX is "riced" out in some movie, doesn't mean an adult with kids isn't going to consider a Civic Sedan, Accord, TSX, or TL for their family, anymore than a Camry or Impala. Agreeably some adults might not purchase a Civic due the reputation it might have as a "ricer" car, I think there's another market of adults (with or without kids) that will purchase a car due to that image just as much (think Civic Si and not the "riced" out Civics of the past Hollywood films). Also, the thing is they probably aren't going to be purchasing the coupe trim anyway if they have kids.

time will tell how many of those customers will be so enomored with those cars like the original hard core die hard hoyotahonda fans.  And as more folks buy those brands, look at how many more trips to service will get talked about around the watercooler.  It will be at that point where the urban legends that have created about hoyotahonda will start to become destroyed.  Lots of olks are expecting that they will never have to get this car fixed.  When the stories start rolling in about how yes, you do need to fix hondas and toyotas too, the legend (no pun inteded) will start to come down to reality.

So you're counting on the reliability of Japanese brands (Toyota and Honda in particular) to drop considerably while the reliability of domestic brands will increase considerably? You're right, time will tell, but I wouldn't hold my breathe.