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- September 26 2016 Honda - The Power of Dreams
Honda – The Power of Dreams
By any criteria in which it is measured, Honda is a genuine success story. They have been the world’s largest manufacturer of motorcycles since 1964. They are the world’s largest manufacturer of internal combustion engines, making over 14m a year. They are the second-biggest player in the Japanese car market (behind Toyota) and the eighth biggest in the world. In 2013, they invested $7bn in R&D and in the same year they became the first Japanese car company to be a net exporter to the United States (108,705 cars out, 88,357 cars in).
Not bad for a company that started 11 years after Toyota and VW, 15 years after Nissan, 29 years after Citröen and 45 years after Ford.
Honda – The Early Years
According to Kiyoshi Kawashima who went on to be Honda’s president for a decade from 1973, September 24th 1948 was just like any other day. Although it wasn’t. It was the day Honda officially came into being. ‘I don’t recall it. Not at all. It must have just been an ordinary day like all the rest. When I left work, I seem to recall that somebody remarked to me, ‘They say that we became an incorporated entity today.’
Another employee, Seiji Isobe also recalls the distinct lack of fanfare. ‘Did everyone gather together for a celebration of the founding? There was no such thing. There was no speech by the president; the sign in front of the plant didn’t change. I think it just stayed the way it was.’
There were 34 employees and a market capitalisation of one million yen (today around £4,000). That was in 1948. Today there are around 200,000 employees and the company has a market cap of 5.1 trillion yen, or £38 billion.
Patriarch Soichiro Honda was a born engineer. In the early 1930s he worked as a mechanic, prepping and tuning cars for racing, and then in 1937 with financial help from a friend he set up Tōkai Seiki, the Eastern Sea Precision Machine Company. They won a contract to make piston rings for Toyota but lost it soon after because their products were terrible.
Honda decided to get a formal engineering education, in part to better understand Toyota’s QC processes, and he eventually won the contract back.
At the outbreak of WWII, Tōkai Seiki (with Honda-san demoted to MD after Toyota took a 40% stake) was placed under government control and aided the war effort by making aircraft propellers. His plant in Yamashita was destroyed by a US B-29 bomber, his Itawa plant collapsed in an earthquake and he eventually sold what was salvageable to Toyota for 450,000 yen.
With that money, he set up the Honda Technical Research Institute.
It sounds grand but the reality was anything but. The ‘institute’ was in fact 12 men in a 170 square foot hut churning out motorised bicycles using a surplus supply of 50cc two-stroke Tohatsu radio generator engines. They quickly ran out and the team made a copy of the engine and called it the ‘bata bata’ after the noise it made.
In 1948 the eponymous company was incorporated and with Honda, the dream team of engineer Kihachiro Kawashima and business and marketing guru Takeo Fujisawa started on a journey to greatness.
The first ‘all Honda’ bike was the pressed steel (and jaw-droppingly beautiful) D-Type in 1949 which went by the name ‘Dream’ and it was an instant hit with the Japanese public. Four years later and in a new purpose-built plant, the C-100 followed and within six years became the world’s best-selling motorbike.
Above: Honda D-Type, 1949
Cars, Cars Everywhere
A decade after the D-Type came an even more beautiful bike, the Honda Dream. Within five years they were the world’s largest motorcycle manufacturer selling 100,000 a month and while the Honda hierarchy could have been forgiven for resting on their laurels, they decided to jump headfirst into the car game – despite a government ban on new car companies…
Their first foray into the four-wheeled world was the rather uninspiring T360 pick-up truck but then in 1963 came the rather beautiful S500. It was only in production for 11 months and they made just over 1,300 cars but the S500 paved the way for what came after.
Honda S500 © Yuu Kogetsu
Over the next quarter-century, Honda continued to break new ground, both at home and crucially, in the European and American markets. They were one of the first companies to understand that not everyone wanted – or needed – a two-seater sports car or a four-door sedan and developed their range to cater for the widest possible audience.
The lukewarmly-received 1969 Honda 1300 preceded the first iteration of the Civic in 1972, a 1.1-litre, four cylinder runaround that satisfied the need – at that time due to the 1973 oil crisis – for fuel-efficient, lightweight city cars. That need remains to this day and Honda has sold close to 20 million Civic models since the first ones rolled off the production line.
1974 Honda Civic © John Lloyd
Not only did they understand the markets in which they were operating, they understood business. They were the first to offer optional extras (eventually all as standard equipment) like anti-lock brakes, speed-sensitive power steering and multi-port fuel injection. They were the first to create a luxury car brand – Acura – and they were the first Japanese company to introduce an all-aluminium, mid-engined sports car. They also introduced variable valve timing technology, known as VTEC.
Honda’s line-up of cars reads like a who’s who of automobile best-sellers – Accord, Legend, Prelude, S2000 and Jazz and while they are undoubtedly all fuel-efficient, very well made, cheap to run, insure and maintain, they didn’t produce the type of car that teenage boys would dream about owning…until the NSX. The all-aluminium, mid-engined sports car came kicking and screaming onto the scene in 1989.
With Honda’s legendary V6 3.0-litre VTEC engine, it was built to genuinely compete with the sports cars coming out of Europe in the late 80s and early 90s. To read the story of the NSX and Mike’s obsession with it, click here.
Honda NSX © Joey Newcombe
Since the 1964 German Grand Prix, Honda’s involvement in motorsport has taken in team, constructor and engine supplier. They won the 2009 F1 world championship in the rebranded Brawn GP car driven by Jenson Button and they have supplied engines to the likes of BAR, McLaren, Williams, Lotus, Tyrell and Jordan.
Between 1986 and 1991, Honda engines powered every constructor’s champion (two with Williams in 1986-7 and four with McLaren 1988-91) and five driver’s champions (Piquet in 1987, Senna in 1988, 1990-1 and Prost in 1989). Remarkable for a company that less than 40 years earlier were working out of a shed in rural Japan.
BAR F1 © studio curve
Honda: Today and Tomorrow
Soichiro Honda was president of the firm until he retired in 1973 and was appointed ‘Supreme Adviser’ in 1983. Dubbed the ‘Japanese Henry Ford’, he died in 1991 but what he left behind was nothing short of remarkable.
A hybrid version of the Civic was launched in 2001 and prior to that, the Insight was released to take on Toyota’s Prius and according to the current Chairman of the Board Fumihiko Ike, that trend seems like it’s going to continue.
He stated in a Wall Street Journal article in February that ‘he wants partially or fully electric cars to account for two-thirds of the company’s global sales by 2030.’ Toyota, Ford and GM are focusing huge resources into electric, hybrid and even hydrogen fuel cell technology and many predict that by 2050 (just 34 years from now) petrol and diesel engines will be in the vast minority, even redundant.
‘There is a Japanese proverb that literally goes ‘raise the sail with your stronger hand’ meaning you must go after the opportunities that arise in life that you are best equipped to do.’