Honda came within touching distance of premium status only to let it slip through their fingers. What happened?
Honda Europe has made a profit just once since 2007, when sales in the region peaked at 313,400 cars. In 2013 sales collapsed to a mere 139,700 cars. What on earth is going on at Japan’s number three motor manufacturer?
During the latter years of the 1980’s Honda appeared poised to make a significant breakthrough in the European market. Perhaps the most engineering-led of mainstream Japanese manufacturers, Honda achieved what its better selling rivals had hitherto failed to manage – credibility. A great deal of this came on the back of their involvement in Formula One – Honda’s engines powering to five World Driver’s Championships. Further evidence lay in the development of the technically advanced and critically acclaimed NSX two-seater, one of a handful of Japanese cars to achieve true and lasting greatness.
Honda’s mainstream saloons and hatchbacks were stylistically appealing, densely engineered and in a first for a Japanese marque, genuinely desirable. The mid-80’s Accord – available in saloon and breadvan-style Aerodeck versions were fast, refined and drove beautifully. Palpably better than most of their putative German rivals in most of the areas that mattered. Further down the range, contemporary Civic models were an endearingly leftfield choice and could be had in a bewildering range of body styles, including the delectable CRX coupé. Engineering advances like variable valve timing, and four wheel steering were rolled out on the kind of production cars people could actually buy. By the late 1980’s, Honda had in many ways, become something of an Asian (pre-Fiat) Lancia, offering top-notch engineering and distinctive style at a vaguely affordable price.
Honda’s engines were also something of legend. With a revered heritage in motorcycles, their power units combined high specific outputs, smooth running and technical novelty – coupled with a metronomic reliability. They also gained Honda a motorsport pedigree that rivals would have killed for.
For a time, Honda looked like joining the ranks of the upper echelon – up with Audi and BMW as upmarket, upwardly mobile chariots of the well-heeled. In fact, Car Magazine featured an Accord on their December 1986 cover, proclaiming a coming Japanese Tsunami. The following decade saw Honda consolidate its position as the engineer’s choice, but somehow the breakthrough never materialised. Somewhere along the way Honda stopped making interesting, technically dense cars; opting instead to chase dreams of serious volume, most particularly in the US car market.
Despite opening a production facility in the UK, Honda’s European ambitions hitherto took a distant second to their efforts to conquer America. Perhaps it was the so called ‘gentleman’s agreement’ coupled with the protectionism of the dominant car producing European states that prompted Honda’s focus Stateside. But equally, Honda lost its mass-appeal – selling mostly to older, more conservative customers.
Recent announcements of job cuts at their Swindon plant and the fact that they will not replace the slow-selling Accord saloon demonstrate the serious trouble they now face. Furthermore, the mainstay Civic has foundered, a mere 38,000 finding buyers across Europe in 2013. Civic sales have slipped 8% again in the year to autumn, while domestic rivals, Mazda have seen an upswing of 131% for their more appealing 3 model. However, these figures pale next to the untouchable Golf, with sales of almost 400,000 units within the same period.
Honda’s current styling is geared to appeal to a more youthful audience – (as every manufacturer is doing) – but appears to only have alienated their traditional customer base while failing to gain new buyers. Certainly, the current Civic is a bit of a visual migraine, with little to otherwise commend it over competing products from the Euro-mainstream. Automotive Industry Data Editor, Peter Schmidt recently told Forbes; ‘Honda’s problems are all of its own making…they’ve got the wrong styling and the wrong prices’. Unsurprisingly, Honda themselves view things differently, a spokesman telling Automotive News in December; ‘We’ve been waiting a few years for new product and now it’s coming,’ He added that Honda is now in a stronger financial position, adding; ‘I believe we are now a lean organization that can move forward. Profitability will come along with that.’
If we are to believe the drip feed, Honda has awoken from its slumber and is once again interested in producing cars to interest Europeans. But apart from ADHD versions of the Civic there’s not much substance to the claims. There is a new mid-engined NSX in the offing and a promise of the futuristic FCV hydrogen fuel cell model down the pipeline suggesting Honda is getting back to truly innovative form. However, most of their promised volume is expected to come from – you guessed it – crossovers. IHS Automotive forecasting Honda to sell around 30,000 units of the newly announced HR-V across Europe this year.
The question for Honda is whether a new generation of industry-generic crossovers can appeal to European buyers who are far more likely to buy something made by the more established players. Having lost the chance to reposition itself at the upper tier, and apparently having no stomach to try to bring the Acura brand across the Atlantic, Honda are now faced with a dilemma. Try another stab as a mass-market player or accept a smaller chunk of the pie and push performance and fuel cell technologies touting the Honda brand as the forward-thinker’s choice. Both come with risks, but having left the European market to its rivals, it seems a little late trying to reverse tack now.
Honda’s recent advertising spoke about of ‘The Power of Dreams’. A nice concept and some clever creative, but they will have to dream up something a lot more convincing if they seriously believe they can now recover the ground they’ve lost.
Sources/data/quotes: Forbes/Automotive News/IHS Automotive/Sands Museum/Left-Lane