The world’s sixth largest car maker, Honda sold a whopping 3.77 million cars in the year 2007. Growing by almost 6% in an epoch when the entire
automotive industry is probably experiencing the worst times, Honda has once again proved its unbeatable market understanding. The company has presence in almost all major markets with strategically located manufacturing bases. The company’s revenues for the year 2007 stood at a mind-numbing $95 billion and that too when the company is perhaps the lowest outsourcer in the entire industry. Honda is probably one of the few carmakers which manufactures its own engines (the most capital intensive component in the finished products category). What’s best, the company has always maintained its profit-earning colours. During the quarter-ended June 30, 2008, the company earned a staggering $2.1 billion from operating profits alone! Expressing the need for Honda to go forward, Takeo Fukui, Global CEO, Honda Motor Company asserts, “A new three-year mid-term plan began in April of this year. The basic idea for this plan is to establish a corporate structure necessary to sustain our strengths and that will enable us to grow globally in the future.” The company intends to restructure its operations for better performance in the long term. In order to increase efficiency and quality, Honda recently transferred production to a new plant in Kumamoto from its Hamamatsu base.
Honda has widely been termed as conservative, but the company’s careful yet very shrewd corporate strategies make complete sense. As per Auto Expert Vikram Gaur, “Even though Honda may not be as aggressive as say Toyota in acquiring market shares, the company carefully studies and launches sportier models to take over the market. This is the company’s market penetration strategy.” Now that is just what Honda did with its ‘Acura’ branded vehicles. These more exclusive Hondas like the speedster NSX are selling like hot cakes in America and have apparently broken all records. However analysts increasingly believe that Honda is more concerned about keeping profits, thereby avoiding any risk. And this is one area where Honda perhaps needs a servicing! This lack of living on the edge shots has indeed paid off well till date, but times are changing too fast today. Apart from Asia where sales increased by about 10.9%, its sales in North America fell by 5.7% and Europe, they were down 8.9% during 2007. The erstwhile ‘standard’ strategies are becoming obsolete as the evolving market spawns fresh challenges, especially in the developed world where the automotive market is stagnant but highly demanding.
automotive industry is probably experiencing the worst times, Honda has once again proved its unbeatable market understanding. The company has presence in almost all major markets with strategically located manufacturing bases. The company’s revenues for the year 2007 stood at a mind-numbing $95 billion and that too when the company is perhaps the lowest outsourcer in the entire industry. Honda is probably one of the few carmakers which manufactures its own engines (the most capital intensive component in the finished products category). What’s best, the company has always maintained its profit-earning colours. During the quarter-ended June 30, 2008, the company earned a staggering $2.1 billion from operating profits alone! Expressing the need for Honda to go forward, Takeo Fukui, Global CEO, Honda Motor Company asserts, “A new three-year mid-term plan began in April of this year. The basic idea for this plan is to establish a corporate structure necessary to sustain our strengths and that will enable us to grow globally in the future.” The company intends to restructure its operations for better performance in the long term. In order to increase efficiency and quality, Honda recently transferred production to a new plant in Kumamoto from its Hamamatsu base.Honda has widely been termed as conservative, but the company’s careful yet very shrewd corporate strategies make complete sense. As per Auto Expert Vikram Gaur, “Even though Honda may not be as aggressive as say Toyota in acquiring market shares, the company carefully studies and launches sportier models to take over the market. This is the company’s market penetration strategy.” Now that is just what Honda did with its ‘Acura’ branded vehicles. These more exclusive Hondas like the speedster NSX are selling like hot cakes in America and have apparently broken all records. However analysts increasingly believe that Honda is more concerned about keeping profits, thereby avoiding any risk. And this is one area where Honda perhaps needs a servicing! This lack of living on the edge shots has indeed paid off well till date, but times are changing too fast today. Apart from Asia where sales increased by about 10.9%, its sales in North America fell by 5.7% and Europe, they were down 8.9% during 2007. The erstwhile ‘standard’ strategies are becoming obsolete as the evolving market spawns fresh challenges, especially in the developed world where the automotive market is stagnant but highly demanding.
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