Washington University in St.

Louis
ARTS AND SCIENCES

Honda: From a Small Japanese Motorcycle Manufacturer to a

Top American Carmaker

Joshu Shih
Japanese Civilization
Dec 6, 2001

Honda. This is a name that, in America, conjures images of high quality. The
benchmark. The best selling car in America. The highest resale value in its class. These
are all statements that have been made with regularly concerning the Honda Accord, a
vehicle that is always on the short list of the most popular cars in this country.
(2001Honda Accord Review)

Even in early as 1985, according to JD Power & Associates, “Honda owners enjoyed the
country’s highest customer-satisfaction rating, edging out even luxurious Mercedes-
Benz” (Koepp,48). Honda, while now sitting comfortably at the top of the US passenger
car market, was not always in this successful position. Less than four decades ago,
Honda was a small Japanese motorcycle maker seeking to break into the U.S auto
market. The Big Three- General Motors, Ford and Chrysler – dominated U.S automobile
sales. Now, Honda is a model that the Big Three try to emulate in order to increase their
own sales. Honda has made great strides in its U.S passenger car sales, from 274,876
units in 1978 to 882,055 units in 2000 (“American Honda Motor” 29; “United States”
198). This increase translates into a jump in market share from approximately three to ten
percent of U.S passenger car sales in that time period. This discussion will trace the
marketing, manufacturing and managerial strategies that Honda Motor Company has
used to climb to its position as a leading carmaker in the United States. Two themes have
contributed to Honda’s success in the United States: the company has seized on
opportunities in the U.S market and it has tailored its practices to fit American culture. In
another example of the Japanese borrowing a foreign idea and improving upon it, Honda
is a benchmark by which other automakers- Japanese and otherwise – are now
measured.

Upon entering the United States, Honda formed the American Honda motor company in
June 1959 to run its American operations (Shook, 30). After a slow start in the United
States market, “Honda built a reputation as a premier maker of small motorcycles”
(Ingrasia and White,326). The company’s U.S sales did not see a sharp increase, though,
until 1993, when Grey Advertising, a large national advertising agency, launched an ad
campaign with the following theme: “You Meet the Nicest People on a Honda” (Ingrasia
and White,326). Until Honda’s ad campaign, motorcycles were synonymous with
Hell’s Angels and catered to “black leather jacket” customer (Ingrasia and White,326).
The result: Honda motorcycle sales topped 100,000 units in 1963, “outselling all
domestic and foreign manufacturers combined. By 1964, Honda had captured nearly 50
percent of the entire American motorcycle market” (Shook,35)
Honda’s activities at this time were not limited to its advances in the motorcycle market.
Honda built its first two automobiles in 1963 and looked to enter the U.S auto mobile
market. However, Honda faced several obstacles to its entrance: a strong reputation as
motorcycle manufacturer would not help Honda’s venture. While Honda motorcycles
were fun products, they were “not a serious purchase as was an automobile” (shook,
35). Also, unlike having previous motorcycle experience to help guide its expansion in
the U.S motorcycle market. Honda would not be able to apply previous automobile
marketing knowledge from Japan. Honda was a relative newcomer to the Japanese auto
market, with Toyota and Nissan having the optimal retail locations in Japan (shook,36).
Instead the company essentially had to start its U.S auto marketing strategy from scratch.
Aware of the fact that it would not be able to rely on its motorcycle reputation to sell its
car in the U.S., Honda required that its cars and motorcycles be sold separately (i.e., cars
and motorcycles could not be sold at the same dealership). Initially, Honda cars were
usually featured in a foreign car department in a Big Three dealership; only in the mid-
1970s did Honda carry enough weight as a legitimate carmaker to insist that dealers
carry its cars exclusively (Shook,37).

After a slow start in the U.S market, Honda introduced an innovation in its automobiles
that established its reputation as a high-quality carmaker in the U.S. In response to strict
new U.S tailpipe emissions standards, Honda developed the Compound Vortex
Controlled Combustion (CVCC) engine (Ingrasia and White,327; Shook,37). This
engine- featured in the Civic model-was powerful for its size, fuel efficient, and able to
meet the stricter emissions standards without needing a catalytic converter, thus keeping
the car’s price low (Shook,37). Honda Civic sales soared to 10,000 units a month by
1975. In 1976, Honda introduced the larger Accord-which Motor Trend magazine
awarded its “Import Car of the Year” honor – and the car was so popular that Accords
were back-ordered at Honda dealers across the U.S. Honda had finally established itself
as a serious player in the U.S c ar market.

Looking to build on its success with the accord and Civic in America, Honda embarked
on a bold and unprecedented plan to build cars in the United States. No other Japanese
automaker had ever done so (Ingrasia and White, 327); a small company lik e Honda
seemed ill-equipped to battle the Big Three giants in their home territory (Shook, 39).
The motivation behind this decision was Honda’s desire to expand, compounded with
Toyota’s and Nissan’s dominance of the Japanese market. These two companies
comprised nearly half of Japanese car sales, with Honda battling eight other
manufacturers for the rest of the market. The Unites States had only four other
automakers, the Big Three and American Motors (Ingrasia and White, 327). All of the
American automakers were plugged with efficiency and quality-control problems, and
Honda saw with the success of its Civic and Accord that Americans consumers were
willing to consider Honda products over American alternatives. Here, Honda saw an
opportunity.

The key questioned that remained was whether American workers-who were widely
portrayed as lazy, oafish and spoiled”- would be able to produce products of quality equal
to Honda’s Japanese workers. For a tentative answer to this question, Honda began by
starting motorcycle production in Maryville, Ohio in 1979. Honda chose this location
because Maryville was south of the United Auto Worker’s territory but still close to parts
suppliers. The motorcycle plant was so successful that within a year, Honda decided to
begin automobile assembly in Maryville as well. The auto factory opened in 1982,
producing the popular accord model and making Honda the first Japanese automaker to
assemble cars in United States.

Honda of America Manufacturing (HAM), led by President Shoichiro Irimajiri, pursued

a company philosophy different from that of Honda back in the homeland. Seeking to
pattern itself after neither management in the Japanese Honda plants nor that of other
American carmakers, HAM implemented a unique set of policies and procedures
(Shook, 45). For example, HAM called its first-line managers “production coordinators”
and its workers “associates”. The latter term “describe how each person would relate to
the other members of the organization. It also reflected a feeling of respect for the
individual, compared to a title that implied a subordinate role (Shook, 46).

An example of differences between the American and Japanese production was

demonstrated when Marysville quality auditors repeatedly found squeaks and rattles in
Accord dashboards. Per Honda policy in Japan, Irimajiri directed that quality data be
fed back to the assembly workers, with the assumption that the workers would trace the
source of the problems on their own. This strategy failed, however, since the squeaks
and rattles continued. After consulting with HAM’s American managers, Iramajiri
learned that American workers collaborated by each individual focusing on his or her
dedicated task. Keeping this observation in mind, Iramajiri asked HAM associates to
place their employee ID number on each dashboard that they installed. The rattles and
squeaks ceased shortly thereafter (Shook, 329). Honda was thus able to produce high-
quality automobiles successfully by adapting to the needs of its workers and not by
forcing Japanesemanagerial policies to be practiced.

Other strategies that Honda implemented-mainly in the person of Iramajiri- were

discussion groups in which associates would give input for improving various aspects
of production (e.g. quality, safety), awards ceremonies for employees who gave
successful suggestions, and an employee fitness center adjacent to the factory (Ingrasia
and White,330). Detroit took notice; by late 1985, Big Three executives-as well as those
from outside the auto industry-came to Marysville to observe Honda’s operations. HAM
achieved another manufacturing marvel when it converted its production line from the
1985 to 1986 model in less than a day, a process that took Big Three factories two to
three months to complete (Ingrasia and White, 330).

As mentioned before, Honda’s success in manufacturing in the United States can be

attributed to its management philosophy, unique to both Japanese and American auto
industries. HAM corporate culture “foster flexibility and innovation” (Koepp, 49). The
company operates with an openness that is rare in the world of Japanese Business, where
consensus and conformity are the rule. To boost communication, Honda has done away
with the executive lunch rooms and private offices. At Marysville, for example,
egalitarianism prevails, all Honda employees, right up to (president Iramajiri) wear white
coveralls with their names stitched in red lettering above the right breast pocket.
In making its associates true team members, Honda increases productivity by seeking
input from all levels of the company and not just management. Also, in feeling that their
contributions are important. Honda associates feel important and thus have less incentive
to be unproductive on the job. Honda adapted to the business environment in wh ich it
operated, allowing it to successful. Honda’s position today as a top American carmaker
came as a result of three key plans of action. First, Honda exploited a market
opportunity. Instead of trying to battle Toyota and Nissan in a saturated Japanese auto
market, Honda started production I in the United States, knowing that it could produce
higher-quality products than its Big Three counterparts. Second, Honda used unique
marketing strategies to position itself as a motorcycle manufacturer- and later a car
company-that would be appealing to a wide variety of Americans. With its advertising
campaign in the 1960s, Honda repositioned motorcycles from the leather-jacket riders to
pedestrian consumers. Later, with its automobiles, Honda sold affordable,
environmentally clean and higher- quality alternatives to Detroit’s offering. Finally,
Honda introduced a managerial strategy for its United States production facilities that
was unique not only to Japanese plants but also to American auto plants in general.
Honda established an egalitarian corporate culture in which Honda associates were free
to contribute input directly to management and shift their responsibilities readily to adapt
to the plant’s needs on the fly. After starting as a small Japanese motorcycle
manufacturer, Honda is now the envy of carmakers large and small the world over.

Reproduced by:

Rosli Mohammed, Ph.D

College of Arts and Sciences
Universiti Utara Malaysia

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dengan amalan kemahiran komunikasi kepengurusan yang dipelajari.

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