The path to writing "Driving Honda: Inside The World's Most Innovative Car Company"began with a question that perplexed me: If globalization was supposed to be sucha boon to multinationals, why are so many large manufacturers struggling to makemoney outside of their home markets?
Few global manufacturers would admit itpublicly, but in many private conversations with executives I heard some version ofthis statement:"We're selling more products than ever in China and South Americaand other emerging markets, but our profit margins there are minuscule to flat,when they even exist."
To address this puzzle, I sought to find companies that could serve as successfulmodels for multinationals operating in a globalized commercial environment; Ihoped to identify the characteristics that make an individual business more likely togenerate high profit margins, innovate, behave in socially responsible ways, and bestrategically creative wherever it establishes a foothold. Almost immediately, HondaMotor Co. fit the bill.
To begin with, Honda has looked outward from its home shores well before othermanufacturers considered making or even selling products overseas. As long ago asthe 1950s, when Honda was only a few years old, the company's founder, SoichiroHonda, bemoaned the limited growth opportunities in "little Japan," declaring thatHonda Motor must "maintain an international viewpoint" and perceive the rest ofthe world as its potential customer base and factory footprint.
It's no surprise, then, that Honda began selling motorcycles in the U.S. as early as 1959and autos a few years later. Nor that Honda stunned the auto industry with its 1974Civic, the first car to meet stringent U.S. Clean Air Act emissions standards evenas the large American automakers and Toyota were claiming it was impossibleto economically produce an engine that lived up to the act's goals. Or that Hondabecame the first non-domestic automaker to successfully manufacture cars in theU.S. when it opened its Anna plant in 1982.
Honda's aggressive early globalization strategy in the U.S. was followed by similarsuccessful forays in other parts of the world: It was the first Japanese companyto produce cars in China and its earnings record in India and Southeast Asia andother far-flung regions is the envy of the auto industry.
In large part because of itsapproach to global operations, Honda, a relative industrial newbie, has a lot to boastabout: By a large margin, Honda is the preeminent engine maker in the world withan output of more than 20 million internal combustion motors annually; Honda hasnever posted a loss in its history, and its automobile operating profit ratios of about5% consistently top the industry; Honda's stock price has nearly doubledsince September 2008, when the global economy collapsed; and Honda vehicles arethe most durable and long-lasting of any automaker, with 75% of its carsand trucks sold in the last 25 years still on the road.
What then has made Honda excel so adeptly as a global multinational? The secretstrategic sauce that distinguishes Honda from other manufacturers can be brokendown into five ingredients:
1. Don't globalize, localize.
Unlike Toyota and most other multinationals in any industry, Honda isnot a top-down company, controlled by headquarters. Instead, Hondamanufacturing subsidiaries virtually everywhere around the world operateas autonomous companies, designing and producing vehicles based onlocal conditions and consumer behavior.
In "The Machine That Changedthe World," the landmark book about automobile lean manufacturing, theauthors praised Honda's localization strategy for "its conviction aboutdoing it all in one place"— in other words, combining engineering, design,and manufacturing functions in each of its large local facilities. By contrast,virtually all industrial companies keep R&D and other technical and designfunctions close to home, where they can be managed by executives who aremiles removed from local preferences and circumstances.
2. Embrace paradox.
Honda is a questioning, knowledge-rich organization, which demands thatits workers at all levels continually poke holes in the status quo. They do thatthrough daily, often spontaneous meetings known as "waigaya" during whichdecisions, large and small, are reevaluated and turned on their head in hopesof finding a better strategic or tactical choice.
Throughout its relativelyshort history, Honda has welcomed paradox as a way to promote criticalthinking and reassess the so-called common wisdom, shaping new responsesto ingrained expectations. As one Honda executive put it: "Waigaya tome means perpetual dissatisfaction. At our company, self-satisfaction isthe enemy." The value of this system to a multinational organization isimmeasurable.
Nothing is more important for global companies todaythan having the dexterity to be simultaneously local and international, toswiftly respond to regional preferences while scaling operating tactics andmanufacturing improvements around the world.And as Honda's successin the international arena demonstrates, this capability is directly linkedto unremittingly reexamining with every new automobile model — morebroadly, with every new undertaking what is already believed to be true.
3. Robots? Not so fast.
Even as most major industrial corporations view robots and other formsof automation as the best way to reduce costs and maintain productivity,Honda prefers a different path. Honda's factories are purposefully the mostlabor intensive in the auto industry, employing robots only in areas that aredangerous or otherwise obviously less fit for humans than machines.
Hondabelieves that assemblers become disengaged and their enthusiasm for theirjobs and, by extension, local innovation is muted by the presence of machineswhose sole purpose is to build cars cheaper and faster than humans.
AsHonda sees it, that output and quality standards are too often set to the levelsthat the technology can achieve and rather than the boundless creativityof human imagination. Consequently, to enhance performance in a localfacility, a new piece of equipment would have to be purchased, instead of anew potentially revolutionary process invented. "Once you automate, you'reincapable of further improvement," said Sean McAlinden, chief economist atthe Center for Automotive Research, paraphrasing Honda's perspective.
4. Put an engineer in the hot seat.
Since Honda's founding in 1949 all of the company's CEOs (including thefather of the company, Soichiro Honda) have been engineers, veterans ofHonda's prized autonomous research and development unit. That's anextraordinary record: Conventional wisdom among multinationals holdsthat the most effective chief executives are specialists in marketing, sales,or perhaps accounting — anything but engineering.
As a result, even CEOsin technologically based industries, like pharmaceuticals or computerhardware and software, tend to know little about designing or manufacturingthe products that they sell or managing the global supply chain or factoryfootprint. That's often why CEOs favor centralization in which their mostloyal lieutenants near headquarters oversee distributed operations, actingas both a trusted proxy and informant for the chief executive.
Reared inR&D, Honda CEOs' strengths lie in product and process innovation, primarilyin designing new vehicle models and features and in conceiving freshtechniques for building them faster and better. Consequently, their successas managers is measured not by quarter-to-quarter results but instead byhow well they cultivate individual creativity throughout the organization andhow well they disburse Honda's unique corporate culture to its decentralizedlocalization strategy to produce continuous innovation.
5. Focus on factory flexibility.
Unlike other manufacturers, Honda can seamlessly produce multiple autoson a single assembly line, one after another, and switch a line over to a newlydesigned vehicle within hours. By contrast, it can take months for Honda'srivals to retool a factory for a new vehicle.
One way Honda achieves this isthrough in-house engineering co-located at each major production facility,serving as an independent operation that is focused solely on local needs.Any problems that arise in the flexible factory can be addressed immediatelyby this team — which at most companies resides near headquarters andreports to corporate top executives — ensuring that the steady streamof automobiles going through the line is not impeded.
Such an efficientand nimble factory is the Holy Grail for all manufacturers and Honda hasearned high marks from auto analysts for its ability to deftly navigate thischallenge. In globalization terms, the advantage Honda gains is in being ableto alter production and capacity of individual models at a moment's notice,depending on local sales trends and the success of competitive brands.
Honda invented the flexible factory through an innovation known assynchronized engineering: all of the vehicles coming into a factory'sassembly zones share common designs, such as similar locations andinstallation techniques for functions like brakes or transmission. As a result,assemblers are agnostic about which car they are building because in thefactory only small variations differentiate, say, an Odyssey from an AccordV6.
Jeffrey Rothfederis an award-winning journalist and former editor-in-chief atInternational Business Times. His latest book is"Driving Honda: Inside The World's Most Innovative Car Company."
FAQs
How Honda became one of the worlds most innovative car companies? ›
Unlike other manufacturers, Honda can seamlessly produce multiple autos on a single assembly line, one after another, and switch a line over to a newly designed vehicle within hours. By contrast, it can take months for Honda's rivals to retool a factory for a new vehicle.
What is Honda's global strategy? ›The company aims to become carbon neutral on all products. Honda Motor this week announced plans to invest around JPY5trn (US$40bn) by 2030 to strengthen its electrification strategy and in connectivity/software technology.
What is unique about Honda cars? ›Impeccable Reliability
Quality is the topmost concern at Honda due to which Honda cars have an endless running period, unlike their competition which starts to fade. Honda has built a massive audience on customer satisfaction & reliability; machines do age over the years but not if you have a Honda!
Honda's brand equity is an extremely valuable source of its competitive advantage since consumers are willing to pay a premium for Honda's vehicles because of the power of its brand and its association with quality and value. As a result, it has led Honda to have best-in-class repeat purchase rates.
Why Honda is the best car company? ›The first reason why you should buy a Honda is its reputation for building durable cars that perform exceedingly well. Right across the entire Honda lineup, you'll find cars that are long-lasting, fuel-efficient, and fun to drive. Honda's reputation for producing durable vehicles is well-deserved.
How did Honda become popular? ›In the 1960s, the company achieved worldwide fame for its motorcycles (in particular, its C100 Super Cub, which became the world's best-selling vehicle); in the 1970s, it achieved worldwide fame for its affordable, fuel-efficient cars.
What is Hondas EV strategy? ›Under a new strategy that calls for investing 5 trillion yen in EVs and other areas by the year ending March 2031, Honda will deepen its alliance with GM, sharing EV platforms and even developing vehicles together.
What are the objectives of Honda company? ›In these areas, we will bring the universal passion of Honda to “serve people worldwide with the joy of expanding their life's potential.” And toward this end, we will “lead the advancement of mobility and enable people everywhere in the world to improve their daily lives.” This is our 2030 Vision Statement.
What is Honda's core competency? ›For example, Honda's core competency is engines.
What is Honda best known for? ›Honda is the largest manufacturer of engines in the world, and they provide their engines to a wide range of other companies producing all kinds of equipment. You can find Honda engines in other vehicles, in custom bikes and motorcycles, and even in powerful construction equipment and machinery.
What makes Honda so reliable? ›
One of the reasons Honda are so reliable is due to their low repair costs and the fact that they aren't off the road too long. Ultimately, if you want a reliable car, then you should definitely look at a Honda.
Is Honda the best car? ›While they are easily some of the most reliable and well-engineered cars in the world, Hondas have their downsides as well. If you're looking for an affordable, practical daily driver, Honda is a good brand to start with. The company is known worldwide for its incredible build quality and longevity.
What are the strengths of Honda? ›1. Strengths of Honda. New innovative techniques and products – With the usage of proper and new innovative techniques and products, it has been able to increase the sales of the company to a large extent.
Who is Hondas biggest competitor? ›Honda's competitors and similar companies include GAC Group, Mitsubishi Motors, Ford Motor, PSA Group, BMW Group, Aptiv, Yamaha Motor and Mercedes-Benz Group.
What is Hondas 2030 vision? ›The 2030 Vision formulated by Honda is expressed in the statement, “Serve people worldwide with the 'joy of expanding their life's potential'— Lead the advancement of mobility and enable people everywhere in the world to improve their daily lives—.” To embody this Vision, the Company set the direction of its specific ...
Where does Honda rank in reliability? ›Overall, RepairPal awards Honda vehicles a 4.0 out of 5 when it comes to safety and reliability—that's number 1 out of the 32 car brands they currently survey! To determine this number, they surveyed 345 unique Honda models.
Which Honda is the best? ›The 2021 Honda Accord reigns supreme among family sedans thanks to its balanced performance and handling, spacious cabin, and undeniable value. With a fun-to-drive nature, a practical cabin, and many trims to choose, the 2021 Honda Civic is an even better compact car than its reputation would suggest.
Which car brand is the most reliable? ›- Lexus. This brand stays at the top, year after year. ...
- Toyota. Many Toyota models are among the most popular cars worldwide because they are affordable, dependable, and easy to maintain.
- Mazda. ...
- Kia. ...
- Honda. ...
- Buick. ...
- Hyundai.
Global R&D
We ensure Honda vehicles work well across the world by conducting research and development on all continents. We of course have far-reaching R&D facilities in Japan, and major projects are led from our headquarters. But we are just as proud of the research and development done at our other global facilities.
Definition of honda
: a metal, knotted, or spliced eye at one end of a lariat through which the other end is passed to form a running noose or lasso.
Who is the oldest car company in the world? ›
Peugeot. Peugeot is the world's oldest car brand in existence. The company was established in 1810 and started off as a coffee-mill company by Armand Peugeot.
Why Honda has no electric car? ›Honda admits, the “electrification nut is a difficult one to crack due to technology, cost, and regulatory challenges,” but the Japanese automaker promises there are lots of Honda and Acura all-electric vehicles on the way, based on a lengthy online presentation last week.
Does Honda have a 100% electric car? ›The fully electric 2024 Honda Prologue SUV heralds a new era of electrified Honda vehicles. With versatility and driving range on par with our existing rugged lineup of SUVs, the adventure-ready Prologue navigates both daily commutes and weekend getaways with ease. Watch the design reveal in the video below.
Will Honda build electric cars? ›Honda has partnered with General Motors to build its initial line of electric cars. Its first, the Honda Prologue, will appear as a 2024 model.
What are the 5 Honda core values? ›- Dreams. To dream is to be alive. ...
- Joy. Joy is a state of being and a conscious choice to live and work with a grateful heart for a cause greater than oneself. ...
- Challenging Spirit. ...
- Passion. ...
- Respect.
The Honda Philosophy consists of Fundamental Beliefs: "Respect for the Individual" and "The Three Joys". This philosophy is not only shared by all associates, but also forms the basis for all company activities and sets the standard for conduct and decision-making throughout Honda.
What is the slogan for Honda cars? ›HONDA The Power of Dreams.
What is the importance of the 3 core competencies? ›Core competencies help an organization to distinguish its products from it's rivals as well as to reduce its costs than its competitors and thereby attain a competitive advantage. It helps in creating customer value. Also, core competencies help in creating and developing new goods and services.
What is an example of core competency? ›Examples of personal core competencies
Strategic planning. Excellent organization skills. Leadership and personnel management. Project management.
The three fundamental characteristics of core competence are: It creates perceived value for customers. It has a wider market applicability. It makes difficult for the rival firms to imitate.
Who's better Honda or Toyota? ›
The Toyota vehicles also consistently last longer than any Honda. According to statistics based on consumer reports, Toyota is the second most reliable automaker after Mazda, and Corolla is the most reliable model. Honda didn't even make it to the top 10 for average reliability.
What is Hondas sports car called? ›7/10 Honda CRX Si
At the heart of the front-wheel drive, CRX Si is a 1.6-liter inline four-cylinder mated to a five-speed manual gearbox to deliver 105hp and 98lb-ft of torque. The lighter curb weight and simplicity made the CRX Si a potent rival to affordable performance vehicles like the beloved Volkswagen GTI.
The Honda N600 is the first automobile sold by Honda Motor Co., Ltd.
Are Hondas actually more reliable? ›Honda is one of the most consistent brands for reliability among different classes, with four different makes at the top of their class and a few additional runner-ups. Regardless of what type of vehicle you're looking for, the odds are that Honda has the most reliable model and the highest rated in its class.
What are the quality tools being used by Honda? ›...
HCPI uses the following Quality Control tools:
- Cause-and-Effect diagram.
- Pareto Analysis.
- Check Sheet.
- Scatter diagram.
- Histogram.
- Stratification.
Honda is known for building safe and reliable vehicles that have proven to stand the test of time. From SUVs including the Honda CR-V and the Honda Pilot to the Honda Odyssey minivan and the Honda Accord and Honda Civic sedans, Honda offers vehicles that lead their classes in long-term reliability.
What is the fastest Honda car? ›Honda today unveiled the next generation of its most high-performance car in the U.S., the 2023 Civic Type R. Honda calls it “the fastest, most powerful Honda-branded vehicle ever offered in the U.S.”
Which is the best car in the world? ›| Name | Top Speed | 0-100 kmh |
|---|---|---|
| Ford GT | 348 kmh/216 mph | 3.3 seconds |
| Lamborghini Aventador SVJ | 350 kmh/217 mph | 2.8 seconds |
| Aston Martin Valhalla | 354 kmh/220 mph | 2.5 seconds |
| Bugatti Chiron Super Sport 300+ | 482.80 kmh/300 mph | 2.4 seconds |
Toyota wins with higher overall ratings and a more versatile lineup. However, Honda vehicles have their strengths too, especially in the SUV segment. Both Honda and Toyota are nearly equal in the plug-in and hybrid vehicle categories.
Are Hondas really that reliable? ›Honda's Reliability Rating as a brand is 4.0 out of 5.0, placing it first among 32 vehicle companies, according to RepairPal. This score is based on an average of nearly 350 different mainstream models.
Why are Honda cars Expensive? ›
Hondas are expensive because of a worsening inventory shortage at dealers across the country. A lack of semiconductor chips has resulted in major production problems from most car brands. In the case of Honda, consumers may find their favorite vehicle to be considerably more expensive compared to normal prices.
Is Honda as reliable as Toyota? ›While Hondas are certainly reliable vehicles, Toyota has the edge when it comes to longevity and overall dependability. Their most popular vehicles, such as the Toyota Camry and Toyota Corolla, are well-known for lasting for hundreds of thousands of miles and for staying on the road for incredibly long periods.
What is the cheapest Honda? ›The cheapest Honda car on the market is the 2022 Honda HR-V. This vehicle has a starting price of $21,870. The price increases with additions and trims. It's a subcompact SUV and one of the best-selling options for Honda amongst drivers today.
Is Honda safer than Toyota? ›As mentioned earlier, Toyota has an award-winning reputation for reliable cars that acquit themselves well on the road. For safety, these two brands size up comparably. In some models, however, Honda comes out on top. Some of their most secure cars include the Honda Ridgeline and the Honda HR-V.
Who is bigger Honda or Toyota? ›In terms of sheer corporate value, Toyota is the most successful, preponderant automaker in the world. Honda is much smaller with an overall value that's just 25 percent of Toyota's. Toyota also sells many more vehicles in the United States every year than Honda.
Where does Honda rank in reliability? ›Overall, RepairPal awards Honda vehicles a 4.0 out of 5 when it comes to safety and reliability—that's number 1 out of the 32 car brands they currently survey! To determine this number, they surveyed 345 unique Honda models.
How long do Hondas last? ›Honda has made a name for itself by becoming the most reliable automaker on the market. Even “poor performing” Hondas are still better rated than most cars on the road. Generally speaking, a Honda can last 200,000 to 300,000 miles and 15-20 years.
Which Honda is the best? ›The 2021 Honda Accord reigns supreme among family sedans thanks to its balanced performance and handling, spacious cabin, and undeniable value. With a fun-to-drive nature, a practical cabin, and many trims to choose, the 2021 Honda Civic is an even better compact car than its reputation would suggest.
Which car is most expensive in the world? ›- Rolls-Royce Boat Tail.
- Bugatti La Voiture Noire.
- Bugatti Centodieci.
- Bugatti Divo.
- Bugatti Bolide.
- Pagani Huayra Roadster BC.
- Bugatti Chiron Super Sport 300+
- Bugatti Chiron Pur Sport.
Which car brands are the most expensive to run? According to the most recent data, BMW tops the list as the most expensive car brand to maintain, followed by Mercedes-Benz, based on estimates of total car maintenance over 10 years.
What brand car lasts the longest? ›
| Longest-Lasting Car Brands to Reach 200,000 Miles- iSeeCars Study | ||
|---|---|---|
| Rank | Model | % of Cars Over 200k Miles |
| 1 | Toyota | 2.0% |
| 2 | Honda | 1.6% |
| 3 | Chevrolet | 1.5% |
Honda has the edge over Kia performance-wise, and the brand also has an advantage with predicted reliability. Honda currently sits at #5 on Consumer Reports' list of most reliable car brands.