Honda made it through the tough times
Ok I know the title sounds a bit cheesy. But what I’m trying to say is that despite the hard times that Honda has been going through lately it is getting back up on its two feet. (Its metaphorical…don’t take it literally.) In the first half of this year Honda has been in a wild roller coaster ride. Its sales dropped in some areas, and then demand for some of its products raised, then a couple of recalls here and there. I didn’t think it would be that crazy. Even its race department had its share of troubles. Now given what Ford has been through in the past several weeks, it is not surprising that General Motors chairman and CEO Rick Wagoner is enjoying bit of schadenfreude ( I honestly don’t know what these word means…LOLZ) at the cost of his Asian rivals.
In an interview with CNNMoney.com last week, Wagoner laughed at Toyota for announcing that they are the latest automaker to open a pick up truck plant in North America. Which turned out to be a not-so-smart move for Toyota since truck sales are down because of the continuous increase of gasoline price. And of course no one can deny the fact that getting a pick up truck now a days is not such a very good move because of the economic downturn. But Wagoner couldn’t throw much bad comment of Honda, though. Maybe he noticed that Honda did not produce any body-on-frame pick ups, and it did not include any of its V-8 engines in its latest release of vehicles. That was indeed a smart move for Honda. Who would actually buy a vehicle with a V-8 engine that uses gas or diesel, right? More so now that the price of gasoline is skyrocketing endlessly. Honda is now making it through the market with great ease. With its release of fuel efficient vehicles, it definitely won the hearts and pocket of many.
He might have added “prescience.” All but alone among the world’s automakers, Honda has long acted as if the world is indeed running out of all kinds of resources, including oil. Its relentless focus on thrift and conservation, which seemed like an unconventional behavior 20 or 30 years ago, today make Honda the leader of the environmental pack. At a time when Americans are hyper-conscious about gas prices — and how can they ignore the media pounding home the message every day - that kind of prescience is paying off for Honda in a big way. I mean gas prices and fuel efficient cars – it’s a perfect formula for Honda.
So while the Detroit Three plus Toyota were getting hammered down on the showroom floor in May, with sales down anywhere from 4.3% for Toyota to 27.5% for General Motors (GM, Fortune 500), Honda posed a stunning 15.6% sales increase. That was enough to vault it ahead of Chrysler for the month and put it in fourth place in North American sales. If you notice, all the other companies’ sales were going down except for Honda. Adding injury to the insult, the Honda Civic became the best selling vehicle in America - car or truck - and both it and the Honda Accord outsold the once-invincible Ford F-150 pickup trucks.
This ain’t rocket science. This is just a simple case of luck and proper analysis of resources. They aren’t making any more oil so, over time, you had to figure it was going to get more expensive and more scarce. So why weren’t other manufacturers able to see the road ahead as well as Honda?
1. They got sidetracked by the easy profits available in big SUVs and pickups. During the 1990s, the last golden age of the American auto industry, the combination of cheap gas and high-profit big vehicles seduced automakers into believing the good times would never end. Then, when the clock started to run down in 2004, the domestics were too hooked on the big money, and too inflexible by virtue of their UAW contracts, to quickly make changes. Toyota and Nissan (NSANY), anxious for their own bite out of the golden apple, got sucked in too, ramping up pickup production at just the wrong time.
2. Honda’s tightly-knit corporate culture and long time horizon made it uniquely able to wait for events to move in its direction, rather than chasing fluctuations in the marketplace. While the car-based Ridgeline truck was savaged by critics for not being a “true” pickup, it now looks like smart move in an era of $4 a gallon gasoline.
3. The other automakers became distracted by their own corporate imperatives. Nissan compounded its problems by starting its own passenger car horsepower race. The Detroit Three, at times, seemed to get their jollies by reviving models from 40 years ago — Mustang, Challenger, Camaro — because of the short term jolt they got in the marketplace, rather than formulating any kind of long-term strategy for a resource-constrained world. And who can explain GM’s infatuation with Hummers long after the brand ceased to resonate in the marketplace?
I just hope Honda keeps up whatever improvements it is having now. Can’t wait to read a news saying that Honda is far ahead from Ford. Obviously I’m not such a big Ford fan. I’m more into Asian vehicles and auto makers. After all they are the ones leading the world through techno growth. (I can be such a techie-geek sometimes…LOLZ)
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