New Honda emerges

HONDA Motor says a fundamental shake-up is underway as it moves to meet the disparate challenges it faces in all global markets.

Among these are the need to gear up for the groundswell of first-time buyers in India and Asia, countering resurgent Korean brands and emerging Chinese makers on a global scale, and the unique issues of mature markets such as Europe and North America. According to board member and Honda Motor India president and CEO Takashi Nagai, making cars that appeal to younger buyers who will then stick with the brand for life is the Holy Grail.

However, he quickly added that in every single case, product was everything, and that maintaining the guiding principles of customer satisfaction in every single vehicle that it makes, through engineering and quality – as dictated by Honda’s late founder Soichiro Honda more than 60 years ago – presented unique and often extremely difficult challenges.

Furthermore, in a global market where rivals that do not always operate by the same rules gained a price advantage, Honda says it cannot afford to abandon its golden rule, and that the existing customer base around the world would not tolerate it and simply move on to one of the company’s hungrily waiting rivals.

Left: Honda's New Small Concept. Below: Honda Motor India president and CEO Takashi Nagai.

Mr Nagai told GoAuto that the first results of Honda’s fresh thinking would emerge in 2011 with the introduction of its sub-B economy car.

Based on the New Small Concept (NSC) hatch previewed at the New Delhi Motor Show last January, it will be an inexpensive five-door hatch to take on the next Nissan Micra as well as a host of other established or upcoming rivals from Hyundai, Kia, Suzuki, Mitsubishi and Toyota.

Although the production NSC (it will have a different name when it will be unveiled) is essentially new, the use of some existing components from other Kei and light-car Hondas produced elsewhere has kept development costs down.

Using suppliers based on India will also help with the baby car’s bottom line – as that is the number one decision-making factor for many of the potential buyers of the NSC in its intended ASEAN markets.

“Building a car to appeal to young people (around the world) is very important,” Mr Nagai said.

“With the Jazz we intended to do that but we have found to our surprise that many of buyers are over 60 years old,” he said, adding that it cannot compete on price anyway in many countries like India.

Mr Nagai says that a paradox has emerged with price sensitive consumers in India and elsewhere since they are becoming much more informed and sophisticated about products due to the internet and globalisation.

Plus, in Honda’s case in India, the brand equity built up over the decades with its association with its Hero Honda and separate Honda Motorcycles division (collectively they account for over 60 per cent of 14 million bike sales each year), further raises their expectations about what a Honda vehicle must deliver.

“Customers want the features of a Honda but then buy on price,” Mr Nagai said.

“So Honda must deliver a Honda but at a lower price. That is the challenge.

“Core values of top engineering, top quality and top customer satisfaction must never be abandoned.

“The NSC will do this, I think.

“It would destroy Honda if we did not deliver on any one of these core values.”

Mr Nagai likened the NSC’s task as the same challenge level Honda faced when it decided to open the first of the US ‘transplants’ in Marysville, Ohio, in 1983, to take on the then-dominant but dinosaur-like Chevrolet, Ford and Chrysler family sedans.

“In the 1980s in America Honda helped to ‘kick out’ the ‘Big Three’ from their position with cars that delivered on these core qualities,” he said.

However, with Honda coming under serious attack in recent times in the US with the critically and commercially acclaimed Hyundai Sonata (i45 in Australia), and in Europe as well due to cars like the Kia Ceed and Picanto, Mr Nagai said that he is concerned that the Korean brands have taken the initiative in the long-established markets that Honda once held more sway.

“We have to be careful that Honda does not become like the ‘Big Three’ used to be in America and get kicked out by Hyundai and Kia,” he said.

“But Honda will not let that happen. I have been driving our new small car (NSC), and I think it has all the quality you expect from a Honda.

“And you will see for yourself next year.”