Honda Motor Company, Ltd.

Introduction
Honda Motor Company, Ltd. is a Japanese public multinational corporation primarily motorcycles. Honda has been the world's largest motorcycle manufacturer since 1959,[3][4] as well as the world's largest manufacturer of internal combustion engines measured by volume, producing more than 14 million internal combustion engines each year.[5] Honda surpassed Nissan in 2001 to become the second-largest Japanese automobile manufacturer.[6][7] As of August 2008, Honda surpassed Chrysler as the fourth largest automobile manufacturer in the United States.[8] Honda is the sixth largest automobile manufacturer in the world. Honda was the first Japanese automobile manufacturer to release a dedicated luxury brand,Acura, in 1986. Aside from their core automobile and motorcycle businesses, Honda also manufactures garden equipment, marine engines, personal watercraft and power generators, amongst others. Since 1986, Honda has been involved with artificial intelligence/robotics research and released their ASIMO robot in 2000. They have also ventured into aerospace with the establishment of GE Honda Aero Engines in 2004 and the Honda HA-420 HondaJet, scheduled to be released in 2012. Honda spends about 5% of its revenues into R&D. known as a manufacturer of automobiles and

History

From a young age, Honda's founder, Soichiro Honda (Honda Sichir) (November 17, 1906 August 5, 1991) had a great interest in automobiles. He worked as a mechanic at a Japanese tuning shop, Art Shokai, where he tuned cars and entered them in races. A self-taught engineer, he later worked on a piston design which he hoped to sell to Toyota. The first drafts of his design were rejected, and Soichiro worked painstakingly to perfect the design, even going back to school and pawning his wife's jewelry for collateral. Eventually, he won a contract with Toyota and built a factory to construct pistons for them, which was destroyed in an earthquake. Due to a gasoline shortage during World War II, Honda was unable to use his car, and his novel idea of attaching a small engine to his bicycle attracted much curiosity. He then established the Honda Technical Research Institute in Hamamatsu, Japan, to develop and produce small 2-cycle motorbike engines. Calling upon 18,000 bicycle shop owners across Japan to take part in revitalizing a nation torn apart by war, Soichiro received enough capital to engineer his first motorcycle, the Honda Cub. This marked the beginning of Honda Motor Company, which would grow a short time later to be the world's largest manufacturer of motorcycles by 1964. The first production automobile from Honda was the T360 mini pick-up truck, which went on sale in August 1963.[10] Powered by a small 356 cc straight-4 gasoline engine, it was classified under the cheaper Kei car tax bracket.[citation needed] The first production car from Honda was theS500 sports car, which followed the T360 into production in October 1963. Its chain driven rear wheels point to Honda's motorcycle origins.[citation needed]

Corporate profile and divisions

Honda headquarters building inMinato, Tokyo

Honda is headquartered in Minato, Tokyo, Japan. Their shares trade on the Tokyo Stock Exchange and theNew York Stock Exchange, as well as exchanges in Osaka, Nagoya, Sapporo, Kyoto, Fukuoka, London, Paris and Switzerland. The company has assembly plants around the globe. These plants are located in China, the United States, Pakistan, Canada, England, Japan, Belgium, Brazil, New Zealand, Indonesia, India, Thailand, Turkey, Taiwan and Per. As of July 2010, 89 percent of Honda and Acura vehicles sold in the United States were built in North American plants, up from 82.2 percent a year earlier. This shields profits from the yens advance to a 15-year high against the dollar.[8] Honda's Net Sales and Other Operating Revenue by Geographical Regions in 2007[11] Geographic Region Total revenue (in millions of )

Japan

1,681,190

North America

5,980,876

Europe

1,236,757

Asia

1,283,154

Others

905,163

American Honda Motor Company is based in Torrance, California. Honda Canada Inc. is headquartered in the Scarborough district of Toronto, Ontario, and is building new corporate headquarters in Markham, Ontario, scheduled to relocate in 2008;[12] their manufacturing division, Honda of Canada Manufacturing, is based in Alliston, Ontario. Honda has also created joint ventures around the world, such as Honda Siel Cars andHero Honda Motorcycles in India,[13] Guangzhou Honda and Dongfeng Honda in China, Boon Siew Honda in Malaysia and Honda Atlas in Pakistan.

Current market position

With high fuel prices and a weak U.S. economy in June 2008, Honda reported a 1% sales increase while its rivals, including the Detroit Big Three and Toyota, have reported doubledigit losses. Honda's sales were up almost 20 percent from the same month last year. The Civic and theAccord were in the top five list of sales.[14][15] Analysts have attributed this to two main factors. First, Honda's product lineup consists of mostly small to mid-size, highly fuel-efficient vehicles. Secondly, over the last ten years, Honda has designed its factories to be flexible, in that they can be easily retooled to produce any Honda model that may be indemand at the moment. Nonetheless, Honda, Nissan, and Toyota, were still not immune to the global financial crisis of 2008, as these companies reduced their profitability forecasts. The economic crisis has been spreading to other important players in the vehicle related industries as well.[16][17] In November 2009 the Nihon Keizai Shinbun reported that Honda Motor exports have fallen 64.1%.[18] At the 2008 Beijing Auto Show, Honda presented the Li Nian ("concept" or "idea") 5-door hatchback and announced that they were looking to develop an entry-level brand exclusively for the Chinese market similar to Toyota's Scion brand in the USA.[19] The brand would be developed by a 5050 joint-venture established in 2007 with Guangzhou Automobile Industry Group.[20][21] Following the Japanese earthquake and tsunami in March 2011 Honda announced plans to halve production at its UK plants.[citation needed] The decision was made to put staff at the Swindon plant on a 2 day week until the end of May as the manufacturer struggled to source supplies from Japan. It's thought around 22,500 cars were produced during this period.

Leadership
19481973 Soichiro Honda 19731983 Kiyoshi Kawashima 19831990 Tadashi Kume 19901998 Nobuhiko Kawamoto 19982004 Hiroyuki Yoshino 20042009 Takeo Fukui since 2009 Takanobu Ito

Products
Automobiles
For a list of vehicles, see List of Honda vehicles.

2008 Honda Accord (USA spec)

Eighth Generation Honda Civic (Asian Version)

Honda's global lineup consists of the Fit, Civic, Accord, Insight, CR-V, and two versions of the Odyssey, one for North America, and a smaller vehicle sold internationally. An early proponent of developing vehicles to cater to different needs and markets worldwide, Honda's lineup varies by country and may feature vehicles exclusive to that region. A few examples are the latest Acura TLluxury sedan and the Ridgeline, Honda's first light-duty uni-body pickup truck. Both were designed and engineered primarily in North America and are exclusively produced and sold there. Other examples of exclusive models to international markets include the Honda Civic five-door sedan sold in Europe that has almost no visual similarities to the North American or Asian versions. Honda's automotive manufacturing ambitions can be traced back to 1963, with the Honda T360, a kei

car truck built for the Japanese market. This was followed by the two-door roadster,

the Honda S500also introduced in 1963. In 1965, Honda built a two-door commercial delivery van, called the Honda L700. Honda's first four-door sedan was not the Accord, but the air-cooled, fourcylinder, gasoline-powered Honda 1300 in 1969. The Civic was a hatchback that gained wide popularity internationally, but it wasn't the first two-door hatchback built. That was the Honda N360, another Kei car that was adapted for international sale as the N600. The Civic, which appeared in 1972 and replaced the N600 also had a smaller sibling that replaced the air-cooled N360, called the Honda Life that was water-cooled. The Honda Life represented Honda's efforts in competing in the kei car segment, offering sedan, delivery van and small pick-up platforms on a shared chassis. The Life StepVan had a novel approach that, while not initially a commercial success, appears to be an influence in vehicles with the front passengers sitting behind the engine, a large cargo area with a flat roof and a liftgate installed in back, and utilizing a transversely installed engine with a front-wheel-drive powertrain.

As Honda entered into automobile manufacturing after World War II, where Japanese manufacturers such as Toyota and Nissan had heritage before the war, it appears that Honda instilled a sense of doing things a little differently than its Japanese competitors. Its mainstay products, like the Accord and Civic, have always employed front-wheel-drive powertrain implementation, which is currently a long held Honda tradition. Honda also installed new technologies into their products, first as optional equipment, then later standard, like anti lock brakes, speed sensitive power steering, and multi-port fuel injection in the early 1980s. This desire to be the first to try new approaches is evident with the creation of the first Japanese luxury chain Acura, and was also evident with the all aluminum, midengined sports car, the Honda NSX, which also introducedvariable valve timing technology, Honda calls VTEC. The Civic is a line of compact cars developed and manufactured by Honda. In North America, the Civic is the second-longest continuously running nameplate from a Japanese manufacturer; only its perennial rival, the Toyota Corolla, introduced in 1968, has been in production longer.[22] The Civic, along with the Accord and Prelude, comprised Honda's vehicles sold in North America until the 1990s, when the model lineup was expanded. Having gone through several generational changes, the Civic has become larger and more upmarket, and it currently slots between the Fit and Accord. Honda increased global production in September 2008 to meet demand for small cars in the U.S. and emerging markets. The company is shuffling U.S. production to keep factories busy and boost car output, while building fewer minivans and sport utility vehicles as light truck sales fall.[23] Honda produces Civic hybrid, a hybrid electric vehicle that competes with the Toyota Prius, and also produces the Insight and CR-Z. Its first entrance into the pickup segment, the light duty Ridgeline, won Truck of the Year from Motor Trend magazine in 2006. Also in 2006, the redesigned Civic won Car of the Year from the magazine, giving Honda a rare double win of Motor Trend honors. It is reported that Honda plans to increase hybrid sales in Japan to more than 20% of its total sales in fiscal year 2011, from 14.8% in previous year.[24] Five of United States Environmental Protection Agency's top ten most fuel-efficient cars from 1984 to 2010 comes from Honda, more than any other automakers. The five models are: 20002006 Honda Insight (53 mpg-US/4.4 L/100 km; 64 mpg-imp combined), 19861987 Honda Civic Coupe HF (46 mpgUS

/5.1 L/100 km; 55 mpg-imp combined), 19941995 Honda Civic hatchback VX (43 mpg/5.5 L/100 km; 52 mpg-imp mpg combined), 2006 Honda Civic Hybrid (42 mpg-US/5.6 L/100 km; The ACEEE has also rated the Civic GX as the greenest car in America for seven consecutive

US

50 mpg-imp combined), and 2010 Honda Insight (41 mpg-US/5.7 L/100 km; 49 mpg-imp combined).
[25]

years.[26]

Motorcycles
For a list of motorcycle products, see List of Honda motorcycles. Honda is the largest motorcycle manufacturer in Japan and has been since it started production in 1955.[27] At its peak in 1982, Honda manufactured almost 3 million motorcycles annually. By 2006 this figure had reduced to around 550,000 but was still higher than its three domestic competitors.[27] During the 1960s, when it was a small manufacturer, Honda broke out of the Japanese motorcycle market and began exporting to the U.S. Taking Hondas story as an archetype of the smaller manufacturer entering a new market already occupied by highly dominant competitors, the story of their market entry, and their subsequent huge success in the U.S. and around the world, has been the subject of some academic controversy. Competing explanations have been advanced to explain Hondas strategy and the reasons for their success.[28] The first of these explanations was put forward when, in 1975, Boston Consulting Group (BCG) was commissioned by the UK government to write a report explaining why and how the British motorcycle industry had been out-competed by its Japanese competitors. The report concluded that the Japanese firms, including Honda, had sought a very high scale of production (they had made a large number of motorbikes) in order to benefit from economies of scale and learning curve effects. It blamed the decline of the British motorcycle industry on the failure of British managers to invest enough in their businesses to profit from economies of scale and scope.

2004 Honda Super Cub

The second explanation was offered in 1984 by Richard Pascale, who had interviewed the Honda executives responsible for the firms entry into the U.S. market. As opposed to the tightly focused strategy of low cost and high scale that BCG accredited to Honda, Pascale found that their entry into the U.S. market was a story of miscalculation, serendipity, and organizational learning in other words, Hondas success was due to the adaptability and hard work of its staff, rather than any long term strategy. For example, Hondas initial plan on entering the U.S. was to compete in large motorcycles, around 300 cc. It was only when the team found that the scooters they were using to get

themselves around their U.S. base of San Francisco attracted positive interest from consumers that they came up with the idea of selling the Super Cub. The most recent school of thought on Hondas strategy was put forward by Gary Hamel and C. K. Prahalad in 1989. Creating the concept of core competencies with Honda as an example, they argued that Hondas success was due to its focus on leadership in the technology of internal combustion engines. For example, the high power-to-weight ratio engines Honda produced for its racing bikes provided technology and expertise which was transferable into mopeds. Honda's entry into the U.S. motorcycle market during the 1960s is used as a case study for teaching introductory strategy at business schools worldwide.

Power equipment
Production started in 1953 with H-type engine (prior to motorcycle).[29] Honda power equipment reached record sales in 2007 with 6,4 million units.[30] By 2010 (Fiscal
year ended 31 March)

this figure had decreased to 4,7 million units.[31] Cumulative production of power

products has exceeded 85 million units (as of September 2008).[32] Honda power equipment includes:

Engines
This section requires expansion. Honda Outboard motor on a pontoon boat

Honda engines powered the entire 33-car starting field of the 2010 Indianapolis 500[33] and for the fifth consecutive race, there were no engine-related retirements during the running of the Memorial Day Classic.[34] Honda, despite being known as an engine company, has never built a V8 for passenger vehicles. In the late 1990s, the company resisted considerable pressure from its American dealers for a V8 engine (which would have seen use in top-of-the-line Honda SUVs and Acuras), with American Honda reportedly sending one dealer a shipment of V8 beverages to silence them.[35] Honda considered starting V8 production in the mid-2000s for larger Acura sedans, a new version of the high end NSX sports car (which previously used DOHC V6 engines with VTEC to achieve its high power output) and possible future ventures into the American full-size truck and SUV segment for both the Acura and Honda brands, but this was cancelled in late 2008, with Honda citing environmental and worldwide economic conditions as reasons for the termination of this project.[36]

Robots
ASIMO at Expo 2005

ASIMO is the part of Honda's Research & Development robotics program. It is the eleventh in a line of successive builds starting in 1986 with Honda E0 moving through the ensuing Honda E series and the Honda P series. Weighing 54 kilograms and standing 130 centimeters tall, ASIMO resembles a small astronautwearing a backpack, and can walk on two feet in a manner resembling human locomotion, at up to 6 km/h (3.7 mph). ASIMO is the world's only humanoid robot able to ascend and descend stairs independently.[37]However, human motions such as climbing stairs are difficult to mimic with a machine, which ASIMO has demonstrated by taking two plunges off a staircase. Honda's robot ASIMO (see below) as an R&D project brings together expertise to create a robot that walks, dances and navigates steps. 2010 marks the year Honda has developed a machine capable of reading a user's brainwaves to move ASIMO. The system uses a helmet covered with electroencephalography and near-infrared spectroscopy sensors that monitor electrical brainwaves and cerebral blood flowsignals that alter slightly during the human thought process. The user thinks of one of a limited number of gestures it wants from the robot, which has been fitted with a Brain Machine Interface.[38]

Aircraft
Main article: Honda HA-420 HondaJet Honda has also pioneered new technology in its HA-420 HondaJet, manufactured by its subsidiary Honda Aircraft Company, which allows new levels of reduced drag, increased aerodynamics and fuel efficiency thus reducing operating costs.[citation needed]

Solar cells
Honda's solar cell subsidiary company Honda Soltec (Headquarters: Kikuchi-gun, Kumamoto; President and CEO: Akio Kazusa) started sales throughout Japan of thin-film solar cells for public and industrial use on 24 October 2008, after selling solar cells for residential use since October 2007.[39]

Mountain bikes
See also: Honda RN-01 G-cross

Honda has also built a Downhill racing bike, known as the Honda RN-01. Honda has taken on several people to pilot the bike, among them isGreg Minnaar. The team is known as Team G Cross Honda. The key feature of this bike is the gearbox, which replaces the standard Derailleurfound on most bikes.

Motorsports
Honda has been active in motorsports, like Motorcycle Grand Prix, Superbike racing and others.

Automobile
See also: Honda Racing F1
Rubens Barrichello driving for Honda

Honda entered Formula One as a constructor for the first time in the 1964 season at the German Grand Prix with Ronnie Bucknum at the wheel. 1965 saw the addition of Richie Ginther to the team, who scored Honda's first point at the Belgian Grand Prix, and Honda's first win at the Mexican Grand Prix. 1967 saw their next win at the Italian Grand Prix with John Surtees as their driver. In 1968, Jo Schlesser was killed in a Honda RA302 at the French Grand Prix. This racing tragedy, coupled with their commercial difficulties selling automobiles in the United States, prompted Honda to withdraw from all international motorsport that year. After a learning year in 1965, Honda-powered Brabhams dominated the 1966 French Formula Twochampionship in the hands of Jack Brabham and Denny Hulme. As there was no European Championship that season, this was the top F2 championship that year. In the early 1980s Honda returned to F2, supplying engines to Ron Tauranac's Ralt team. Tauranac had designed the Brabham cars for their earlier involvement. They were again extremely successful. In a related exercise, John Judd's Engine Developments company produced a turbo "Brabham-Honda" engine for use in IndyCar racing. It won only one race, in 1988 for Bobby Rahal at Pocono. Honda returned to Formula One in 1983, initially with another Formula Two partner, the Spirit team, before switching abruptly to Williams in 1984. In the late 1980s and early 1990s, Honda powered cars won six consecutive Formula One Constructors Championships. WilliamsF1 won the crown in 1986 and 1987. Honda switched allegiance again in 1988. New partners Team McLaren won the title in 1988, 1989, 1990 and 1991. Honda withdrew from Formula One at the end of 1992, although the related Mugen-Honda company maintained a presence up to the end of 1999, winning four races with Ligier and Jordan Grand Prix. Honda debuted in the CART IndyCar World Series as a works supplier in 1994. The engines were far from competitive at first, but after development, the company powered six consecutive drivers

championships. In 2003, Honda transferred its effort to the rival IRL IndyCar

Series. In 2004,

Honda-powered cars overwhelmingly dominated the IndyCar Series, winning 14 of 16 IndyCar races, including the Indianapolis 500, and claimed the IndyCar Series Manufacturers' Championship, Drivers' Championship and Rookie of the Year titles. In 2006, Honda became the sole engine supplier for the IndyCar Series, including the Indianapolis 500. In the 2006 Indianapolis 500, for the first time in Indianapolis 500 history, the race was run without a single engine problem.[40] During 1998, Honda considered returning to Formula One with their own team. The project was aborted after the death of its technical director,Harvey

Postlethwaite. Honda instead came

back as an official engine supplier to British American Racing (BAR) and Jordan Grand Prix. Honda bought a stake in the BAR team in 2004 before buying the team outright at the end of 2005, becoming a constructor for the first time since the 1960s. Honda won the 2006 Hungarian Grand Prix with driver Jenson Button. It was announced on 5 December 2008, that Honda would be exiting Formula One with immediate effect due to the 2008 global economic crisis.[41] The team was sold to former team principal Ross Brawn, renamed Brawn GP and subsequently Mercedes GP.[42] Honda became an official works team in the British Touring Car Championship in 2010.

Motorcycles
Main article: Honda Racing Corporation
Honda RC212V raced by Dani

Pedrosa

Honda Racing Corporation (HRC) was formed in 1982. The company combines participation in motorcycle races throughout the world with the development of high potential racing machines. Its racing activities are an important source for the creation of leading edge technologies used in the development of Honda motorcycles. HRC also contributes to the advancement of motorcycle sports through a range of activities that include sales of production racing motorcycles, support for satellite teams, and rider education programs. Soichiro Honda, being a race driver himself, could not stay out of international motorsport. In 1959, Honda entered five motorcycles into the Isle of Man TT race, the most prestigious motorcycle race in the world. While always having powerful engines, it took until 1961 for Honda to tune their chassis well enough to allow Mike Hailwood to claim their first Grand Prix victories in the 125 and 250 ccclasses. Hailwood would later pick up their first Senior TT wins in 1966 and 1967. Honda's race bikes were known for their "sleek & stylish design" and exotic engine configurations, such as the 5-cylinder, 22,000 rpm, 125 cc bike and their 6-cylinder 250 cc and 297 cc bikes.

In 1979, Honda returned to Grand Prix motorcycle racing with the monocoque-framed, fourstroke NR500. The FIM rules limited engines to four cylinders, so the NR500 featured non-circular, 'race-track', cylinders, each with 8 valves and two connecting rods, in order to provide sufficient valve area to compete with the dominant two-stroke racers. Unfortunately, it seemed Honda tried to accomplish too much at one time and the experiment failed. For the 1982 season, Honda debuted their first two-stroke race bike, the NS500 and in 1983, Honda won their first 500 ccGrand Prix World Championship with Freddie Spencer. Since then, Honda has become a dominant marque in motorcycle Grand Prix racing, winning a plethora of top level titles with riders such as Mick Doohan and Valentino Rossi. In the Motocross World Championship, Honda has claimed six world championships. In the World Enduro Championship, Honda has captured eight titles, most recently with Stefan Merriman in 2003 and with Mika Ahola from 2007 to 2010. In observed trials, Honda has claimed three world championships with Belgian rider Eddy Lejeune.

Electric and alternative fuel vehicles

2009 Honda Civic GX hooked up to Phill refueling system

Top: Brazilian flexible-fuel Honda Civic. Below: U.S. Honda Civic Hybrid.

2010 Honda Insight hybrid electric vehicle(Second generation).

Honda FCX Clarity hydrogen fuel cellvehicle

Marketing
Japan

Honda Clio (Saitama, Saitama, Japan)

Starting in 1978, Honda in Japan decided to diversify their sales distribution channels, and createdHonda Verno, which sold established products with a higher content of standard equipment and a more sporting nature. The establishment of Honda Verno coincided with its new sports compact, called the Honda Prelude. Later, the Honda Vigor, the Honda Ballade, and the Honda Quint were added to Honda Verno stores. The word "verno" is a mountain range covering the northeasternKastoria and southwestern Florina prefectures in Greece. Its peaks stand over 2,128 m (6,982 ft). As sales progressed, Honda created two more sales channels, called Honda Clio in 1984, andHonda Primo in 1985. In Greek mythology, Clio ( /kla.o/; Greek: ) or Kleio, is the museof

history. In Italian, the word "primo" means "first" or "prime". The Honda Clio chain sold products that were traditionally associated with Honda dealerships before 1978, like the Honda Accord, andHonda Primo sold the Honda Civic, kei

cars, such as the Honda Today, superminis like the Honda

Capa, along with other Honda products, such as farm equipment, lawn mowers, portable generators, marine equipment, motorcycles, and scooters. A styling tradition was established whenHonda Primo and Clio began operations, in that all Verno products had the rear license plate installed in the rear bumper, while Primo and Clioproducts had the rear license plate installed on the trunk lid or rear door for minivans. As of March 2006, the three sales chains were discontinued, with the establishment of Honda Cars dealerships.[70] Honda sells genuine accessories through a separate retail chain called "Honda Access" for both their motorcycle, scooter and automobile products. Buyers of used vehicles are directed to a specific Honda retail chain that sells only used vehicles called Honda Auto Terrace.

All cars sold at Honda Verno

Honda Prelude, Honda Integra, Honda CR-X, Honda Vigor, Honda Saber, Honda Ballade, Honda Quint, Honda Crossroad, Honda Element,Honda NSX, Honda HR-V, Honda Mobilio Spike, Honda S2000, Honda CR-V, Honda That's, Honda MDX, Honda Rafaga, Honda Capa, and theHonda Torneo

All cars sold at Honda Clio

Honda Accord, Honda Legend, Honda Inspire, Honda Avancier, Honda S-MX, Honda Lagreat, Honda Stepwgn, Honda Elysion, Honda Stream,Honda Odyssey (int'l), Honda Domani, Honda Concerto, Honda Accord Tourer, Honda Logo, Honda Fit, Honda Insight, Honda That's, Honda Mobilio, and the Honda City

All cars sold at Honda Primo

Honda Civic, Honda Life, Honda Acty, Honda Vamos, Honda Hobio, Honda Ascot, Honda Ascot Innova, Honda Torneo, Honda Civic Ferio,Honda Freed, Honda Mobilio, Honda Orthia, Honda Capa, Honda Today, Honda Z, and the Honda Beat

International efforts
In 2003, Honda released its Cog advertisement in the UK and on the Internet. To make the ad, the engineers at Honda constructed a Rube Goldberg Machine made entirely out of car parts from a Europe Market Honda Accord (upon which the US market Acura TSX is based). To the chagrin of the engineers at Honda, all the parts were taken from two of only six hand-assembled preproduction models of the Accord. The advertisement depicted a single cog which sets off a chain of events that ends with the Honda Accord moving and Garrison Keillor speaking the tagline, "Isn't it nice when things just... work?" It took 606 takes to get it perfect.[71] In 2004, they produced the Grrr advert, usually immediately followed by a shortened version of the 2005 Impossible Dream advert.

A post 2005 style Honda dealership inMoncton, Canada

In December 2005, Honda released The Impossible Dream a two-minute panoramic advertisement filmed in New Zealand, Japan and Argentina which illustrates the founder's dream to build performance vehicles. While singing the song "Impossible Dream", a man reaches for his racing helmet, leaves his trailer on a minibike, then rides a succession of vintage Honda vehicles: a motorcycle, then a car, then a powerboat, then goes over a waterfall only to reappear piloting a hot air balloon, with Garrison Keillor saying "I couldn't have put it better myself" as the song ends. The song is from the 1960s musical Man Of La Mancha, sung by Andy Williams. In 2006, Honda released its Choir advertisement, for the UK and the internet. This featured a 60person choir who sang the car noises as film of the Honda Civic are shown. For the last several years in the United States, during model close-out sales for the current year before the start of the new model year, Honda's advertising has featured an animated characterknown simply as Mr. Opportunity, voiced by Rob Paulsen. The casual looking man talks about various deals offered by Honda and ends with the phrase "I'm Mr. Opportunity, and I'm knockin'", followed by him "knocking" on the television screen or "thumping" the speaker at the end of radio ads. Also, commercials for Honda's international hatchback, the Jazz, are parodies of well-known pop culture images such as Tetris andThomas The Tank Engine.

In late 2006, Honda released an ad with ASIMO exploring a museum, looking at the exhibits with almost child-like wonderment (spreading out its arms in the aerospace exhibit, waving hello to an astronaut suit that resembles him, etc.), while Garrison Keillor ruminates on progress. It concludes with the tagline: "More forwards please". Honda also sponsored ITV's coverage of Formula One in the UK for 2007. However they had announced that they would not continue in 2008 due to the sponsorship price requested by ITV being too high. In May 2007, focuses on their strengths in racing and the use of the Red H badge a symbol of what is termed as "Hondamentalism". The campaign highlights the lengths that Honda engineers go to in order to get the most out of an engine, whether it is for bikes, cars, powerboats even lawnmowers. Honda released its Hondamentalism campaign. In the TV spot, Garrison Keillor says, "An engineer once said to build something great is like swimming in honey", while Honda engineers in white suits walk and run towards a great light, battling strong winds and flying debris, holding on to anything that will keep them from being blown away. Finally one of the engineers walks towards a red light, his hand outstretched. A web address is shown for the Hondamentalism website. The digital campaign aims to show how visitors to the site share many of the Hondamentalist characteristics. At the beginning of 2008, Honda released the Problem Playground. The advert outlines Honda's environmental responsibility, demonstrating a hybrid engine, more efficient solar panels and the FCX Clarity, a hydrogen powered car. The 90 second advert features large scale puzzles, involving Rubik's cubes, large shapes and a 3-dimensional puzzle. On 29 May 2008, Honda, in partnership with Channel 4, broadcast a live advertisement. It showed skydivers jumping from an aeroplane over Spain and forming the letters H, O, N, D and A in mid-air. This live advertisement is generally agreed to be the first of its kind on British television. The advert lasted three minutes. The next flight of one of the two planes involved resulted in a fatal crash as the plane broke apart in mid-air.[72] In 2009, American Honda released the Dream the Impossible documentary series, a collection of 58 minute web vignettes that focus on the core philosophies of Honda. Current short films include Failure: The Secret to Success, Kick Out the Ladder and Mobility 2088. They feature Honda employees as well as Danica

Patrick, Christopher Guest, Ben Bova, Chee Pearlman, Joe

Johnston and Orson Scott Card. The film series plays at dreams.honda.com. As part of its marketing campaign, Honda is an official partner and sponsor of the National Hockey League, the Anaheim Ducks of the NHL, and the arena named after it: Honda Center. Honda also sponsors The Honda Classic golf tournament and is a sponsor of Major League Soccer. The "Honda Player of the Year" award is presented in United States soccer. The "Honda Sports Award" is given to the best female athlete in each of twelve college sports in the United States. One of the twelve Honda

Sports Award winners is chosen to receive the Honda-Broderick Cup, as "Collegiate Woman Athlete of the Year."

Business Summary
Honda Motor Co., Ltd., established in 1948, is Japans #3 automaker after Toyota and Nissan and the largest manufacturer of motorcycles in the world. It is the worlds largest producer of internal combustion engines, including its motorcycle and power products businesses. The Company is recognized internationally for its expertise and leadership in developing and manufacturing a wide variety of products, ranging from small general-purpose engines to specialty sports cars that incorporate Honda's highly efficient internal combustion engine technology. It has a global network that comprises 434 subsidiaries and affiliates, including 118 production facilities in 33 countries. Approximately 11.5 million Honda engines were sold worldwide during the fiscal year ended March 31, 2000. The company's car models include the Accord, Legend, and Civic, as well as the luxury Acura and the Insight -- a gasoline-electric hybrid. Japan and North America each account for more than 40% of sales.

Overall performance in FY Mar. 2001

During fiscal Mar. 2001, Honda achieved record-high automobile sales in all regions other than Europe, with unit sales worldwide increasing 4.3% compared with the previous fiscal year, to 2.58 million units. This increase in unit sales helped offset the negative impact of the yen appreciation on net sales, which amounted to 5,231.3 billion ($42,222 million), an increase of 5.4% from the previous fiscal year. Operating income amounted to 320.0 billion ($2,583 million), decreasing 8.1%, while the operating margin was 6.1%. Production Process Improvement through the New Manufacturing System In September 2000, Honda introduced its New Manufacturing System, which improves product quality, reduces tooling costs, increases global production flexibility and increases the speed of new model launches. The Company has been steadily advancing the new system and began operations

on the first revamped line at the Suzuka Factory in May 2000, to coincide with the introduction of the new Civic. In adopting the New Manufacturing System, improvements were made to many aspects of the production process from the perspectives of quality, cost, production flexibility and environmental compliance. In Japan, the principal achievements of these improvements included: 1) 50% reduction in specific investment associated with the introduction of new models. 2) 50% reduction in the initial investment required for building a new production line. 3) 30% reduction in production time from the initial process to final vehicle inspection. 4) Increase in the number of models that can be manufactured on a single line from five to eight. Honda is planning to adopt the new system overseas in the future. Honda plans to continue overseas production Regarding the production of power products in Japan, Honda will continue to shift production overseas to mitigate currency risks, with plans to reduce annual production output from the current approximate 2.6 million units to 2.0 million units by fiscal 2004. These moves will include the transfer of general-purpose engine production from six lines at the Hamamatsu Factory to two new flexible lines at the Kumamoto Factory.

Competitors
Ford
Ford is worlds #2 maker of cars and trucks, behind GeneralMotors. It makes vehicles under brands that include Aston Martin, Ford, Jaguar, Lincoln, Mercury, and Volvo. Ford owns a controlling (33%) stake in Mazda and has purchased BMW's Land Rover SUV operations. Ford's finance subsidiary, Ford Motor Credit, is the US's #1 auto finance company. Ford also owns Hertz, the #1 car rental firm in the world. J. Nasser, Ford's CEO, resigned in late 2001 and was replaced by chairman and great-grandson of the company's founder, William Clay Ford Jr. The Ford family owns about 40% of the company's voting stock.

Toyota
Is Japans largest and the worlds 4 the largest car manufacturer? Toyota sells, manufactures and markets cars, trucks and buses worldwide under the Toyota, Lexus and Daihatsu brands. Toyota accompanies its automotive business with a large business portfolio in financial services, including sales finance, vehicle insurance, and credit cards. Other diversified businesses include telecommunications through a subsidiary, industrial equipment, prefabricated housing, and leisure boats.

Daimler-Chrysler
Daimler Chrysler AG, manufactures and sells cars and trucks under the names, Mercedes-Benz, Chrysler, Plymouth, Jeep and Dodge, manufactures commercial vehicles, provides related financial services and has aerospace operations. The Daimler Chrysler Group is active primarily in Europe and in the United States, Canada and Mexico. Through its alliance with Mitsubishi Motors Corporation, the Group expects to increase its presence in the Asian market. Daimler Chrysler AG was incorporated on May 6, 1998 in the course of the business combination of Daimler-Benz Aktiengesellschaft and Chrysler Corporation.

GM
GM is the worlds #1 manufacturer of cars and trucks. General Motors Corporation has two operating segments, Automotive, Communications Services and Other Operations, which consists of the design, manufacturing, and marketing of cars, trucks, locomotives, and heavy-duty transmissions and related parts and accessories, as well as the operations of Hughes Electronics Corporation; and Financing and Insurance Operations, consisting primarily of General Motors Acceptance Corporation, which provides a broad range of financial services, including consumer vehicle financing, full-service leasing and fleet leasing, dealer financing, car and truck extended service contracts, residential and commercial mortgage services, vehicle and homeowners' insurance, and asset-based lending.

Nissan
Nissan Motor Co., Ltd. was established in 1933 to manufacture and sell small Datsun passenger cars and auto parts. Nissan Motor Co., Ltd. and Renault announced a plan to accelerate development of the Renault-Nissan bi-national group. The plan provides for cross-shareholdings, with Renault raising its equity participation in Nissan from 36.8% up to 44.4%. Additionally, Nissan would acquire an equity stake of 15% in Renault, through a reserved capital increase. Renault and Nissan would create Renault-Nissan BV, a joint and equally owned management company operating under Dutch law, with headquarters in Paris and Tokyo. Renault-Nissan BV will steer Alliance strategy and supervise common activities on a global level, while respecting the identity and culture of each company and not interfering in operations.

Risks
Global consolidation trend not seen as major disadvantage for nonparticipating Honda Honda has remained steadfastly independent while the global auto industry has rapidly consolidated

in the past few years. Only six groupsin order, General Motors, Ford Motor, Daimler Chrysler, Toyota Motor, Volkswagen and Renault-Nissan Motorproduce more than 4 million vehicles per year in the world, which accounts for more than 80% of all vehicles produced globally. However, we consider Honda is unlikely to be substantially disadvantaged by its refusal to join the consolidation trend for the following reasons. 1) Alliances and mergers often fail to live up to expectations. Daimler Chrysler is a typical example. 2) Honda has gained large benefits of economies of scale in internal combustion engines because of its motorcycle and power product businesses. Combined with the lightvehicle business, these represent more than 10 million units per year on a consolidated basis, making Honda the largest producer of petrol engines in the world. Other larger makers that have invested heavily in alliancesparticularly with companies in difficult situations that subsequently require substantial financial and management resources to correct may find that they are unable to spare as much relative to their size in forward-looking R&D. Even for US recession and exchange rate movements Honda expected to sustain earnings growth Although the cooling of US economy, Hondas unit sales is not expected to fall significantly. Due to a superior product line-up, especially in the light-vehicle market, finds relatively more favor with comparatively recession-proof middle-class consumers, as well as a growing presence in the lighttruck segment. Concurrently, we anticipate that the companys second and third most important businessescars in Japan and motorcycles in developing Asiawill grow over this period to further cushion any downside risk to overall earnings. In our view, one of the principal risks for Honda is a full recession in the US, in which the lightvehicle market falls drastically. Even in a hardlanding scenario, we expect exchange rate gains to deliver growth. However the risk is foreign exchange rate volatility, which has a major impact on Hondas share price. Clearly, the correlation between the yen-dollar rate and the share price is greatest when there are sharp movements, such as in spring 1995 and autumn 1998. Growth Prospects (Please see Appendix A for numbers.) In Northern American market before the 1990s, the automobile sales have been cyclical with

duration of 5-7 years. In the 1990s the industry continued to grow for a long time and recorded historical high sales in 1999. However, we assumed the trend would go back to that of before 90s and the unit growth would be basically zero although there would be ups and downs yearly basis.

In FY Mar. 2001in North America, net sales increased 7.8%, to 2,999.4 billion ($24,209 million). Although U.S. industry demand grew 2.6%, to 17.4 million units during calendar 2000, it is expected to drop to the 16.0 million to 16.5 million unit level in 2001 amid concerns over a continuing economic slowdown. North America accounts for 57.3% of total revenue of Honda. Even amid fears of a slowdown in the U.S. economy, Honda sold a record-breaking 1,346,000 units in fiscal Mar. 2001. Brisk sales of the Odyssey and Acura TL, as well as the introduction of the brand-new Acura MDX SUV, helped improve the Companys model mix and contributed greatly to these results. The Company expects its North American sales in fiscal Mar. 2002 to expand to 1.37 million units, an increase of 1.8%. Anticipating that the light truck market will continue to be a growth area, Honda plans to expand the production capacity at the second production line of the Alliston plant in Canada from 170,000 to 180,000 units to meet the massive demand for the Odyssey and Acura MDX. Further, production of the Odyssey will start in the new plant in Alabama in late 2001. In the next five years, we assume Honda can gain market share in the Northern American market due to the introduction of new products in Minivan/SUV segment. In addition, due to the favorable product mix change, the average unit price would rise in the Hondas Northern American segment. In the Japanese market, due to the sluggish economic situation, the unit sales basically stayed flat in the 1990s although there were ups and downs in yearly basis. In Japan FY Mar.2001, total industry demand grew 1.6%, to 5.97 million units. Hondas unit sales in Japan for fiscal 2001

increased 9.9% to 776,000 units, and net sales amounted to 1,529.4 billion ($12,344 million), an increase of 9.8% from the previous fiscal year. Strong sales of the redesigned Civic, the new Stream minivan, and the Life Dunk minivehicle contributed to FY Mar. 2001 results. In particular, average monthly sales of the Stream vastly exceeded the original sales target of 6,000 units, to surpass 10,000 units in sales. For fiscal Mar. 2002, the Company anticipates an increase in unit sales to 830,000 units, based on full-year sales of the Civic, the introduction of the redesigned Step WGN, a brand-new 1.3liter small car with the new i-DSI (Dual & Sequential Ignition) gasoline engine, as well as the allnew CR-V and Integra. We believe that it is difficult to assume the Japanese market to recover in the foreseeable future, so we set the markets unit sales growth as zero in the next five years. However, as in the Northern American market, we assume Honda can gain market share supported by the popularity of its Minivan/SUV in the younger generation. The unit price would stay the same because of the deflationary economic condition of the Japanese economy and the favorable product mix change is not likely. In Europe, several factors negatively impacted automobile operations during fiscal Mar. 2001, including the appreciation of the yen, the weakness of the euro against the sterling pound and pricing pressure in the United Kingdom. Due to this business environment, Hondas automobile unit sales in Europe declined 23.3%, to 191,000 units, and net sales declined 30.8%, to 311.2 billion ($2,512 million). Hondas market share is likely to stay constant because we believe it is difficult, as it has been, to establish Hondas favorable brand image in the European market in the short period of time. Our assumption of the Hondas sales in Europe only reflects macroeconomic inflation. Other markets growth prospect is, in the long run, better than those of developed countries. However, the macro economic and political situations are not stable in this market. Therefore, as in the European market, our assumption of Hondas sales in other markets only reflects macroeconomic inflation. Motorcycle markets prospect is better in terms of unit sales, compared with that of automobile

markets, because automobile is still expensive in the developing countries standard but people in developing countries afford motorcycle. Therefore, we assume unit growth in this market is 5% for the next five years. We also assumed Hondas market share and the unit price stay constant. We believe that Financial Services grows steadily at 5% in the next 5 years. Honda rapidly expanded its direct financing lease business in the mid-late 90s taking advantage of its excess cash flow it generated in its automobile business. However, we believe that the growth in this business would get into steady growth stage in the next five years. Motorcycle markets prospect is better in terms of unit sales, compared with that of automobile markets, because automobile is still expensive in the developing countries standard but people in developing countries afford motorcycle. Therefore, we assume unit growth in this market is 5% for the next five years. We also assumed Hondas market share and the unit price stay constant. We believe that Financial Services grows steadily at 5% in the next 5 years. Honda rapidly expanded its direct financing lease business in the mid-late 90s taking advantage of its excess cash flow it generated in its automobile business. However, we believe that the growth in this business would get into steady growth stage in the next five years

Valuation Predictions
Actual Current Price $ 76 P/E Valuation (Ordinary) $ 131.38 P/E Valuation (Segment Adjusted) $ 119.46 PEG Valuation $ 153.5 M/B Valuation $ 66.58 EBO (Abnormal Earnings) Valuation $ 43.97 DCF Valuation $ 84.71 Performance of HMC 52 week change of HMC 8.1% Return on S&P 500 -16.8%

Sports
In Australia, Honda advertised heavily during most motor racing telecasts, and was the official sponsor of the 2006 FIA Formula 1 telecast on broadcaster channel "Ten". In fact, it was the only manufacturer involved in the 2006 Indy Racing League season. In a series of adverts promoting the history of Honda's racing heritage, Honda claimed it "built" cars that won 72 Formula 1 Grand Prix. Skeptics[who?] have accused Honda of interpreting its racing history rather liberally, saying that virtually all of the 72 victories were achieved by Honda powered (engined) machines, whereas the cars themselves were designed and built by Lotus F1, Williams F1, and McLaren F1 teams, respectively. However, former and current staff of the McLaren F1 team have reiterated that Honda contributed more than just engines and provided various chassis, tooling, and aerodynamic parts as well as funding. Ayrton

Senna, arguably the greatest F1 driver of all time, repeatedly stated that Honda probably
played the most significant role in his three world championships. He had immense respect for founder, Soichiro Honda, and had a good relationship with Nobuhiko Kawamoto, the chairman of Honda at that time. Senna once called Honda "the greatest company in the world". As part of its marketing campaign, Honda is an official partner and sponsor of the National Hockey League, the Anaheim Ducks of the NHL, and the arena named after it: Honda Center. Honda also sponsors The Honda Classic golf tournament and is a sponsor of Major League Soccer. The "Honda Player of the Year" award is presented in United States soccer. The "Honda Sports Award" is given to the best female athlete in each of twelve college sports in the United States. One of the twelve Honda Sports Award winners is chosen to receive the Honda-Broderick Cup, as "Collegiate Woman Athlete of the Year."

Investment Summary
We assign a rating of market outperform on Honda Motor Company at its current price of $76 and a 12-month target price of $85 (based on DCF valuation). Comparative P/E and PEG analysis also show that Honda is undervalued compared with its competitors such as GM, Ford, Daimler-Chrysler, etc. We expect Hondas market share in the Northern American market, where Honda generate 80 90% of its operating profit, due to the introduction of Minivan/SUV. Favorable change in the product mix would lead to the improved operating profit margin. Global consolidation trend by the major competitors may disadvantage Hondas global strategy. US recession and volatile currency may hit Hondas sales.

Sales

Calendar year

Total US sales

1999

1,076,893

2000

1,158,860

2001

1,207,639

2002

1,247,834

2003

1,349,847

2004

1,394,398

2005

1,462,472

2006

1,509,358

2007

1,551,542

2008

1,284,261

2009

1,150,784[73]

2010

1,230,480

References

"Move

Over, Volvo: Honda Sets New Safety Standard for Itself", an

article in the "News" section of the March 2004 issue of Motor Trend, onpage 32

2004 Annual Corporate Report[dead link] The story of Honda's entry and growth in the American market is documented in Terry Sanders' film The Japan Project: Made in Japan.Honda

Honda's Midlife Crisis: Honda's slipping market position and views of Fukui Takeo (Chief Executive magazine, December 2005 issue) Honda's Corporate History