Honda-History

Prior to World War II, the landscape of automobile manufacturers included Americans, Germans, French, British, and Italians. While other countries participated in this industry, few made more than an odd ripple in the tide. This would eventually change and the beginnings date back to the late 1940s. In Japan, cars were being made before the war. Some Japanese built cars go back almost as far as the turn of the 20th century. According to Marco Ruiz's book The Complete History of the Japanese Car, a few Takuris, Tokyo's DATs, and Mitsubishis were produced before 1920, as well as a handful of other cars. A few true attempts at automobile manufacture continued until 1941 when annual Japanese automobile production had reached 46,498.

During the first half of the 20th century, Japanese industry was ruled by the zaibatsu, large family-dominated conglomerates. The zaibatsu were dissolved during the Allied occupation in order to promote growth of the economy.

After the war, a number of companies had emerged to rebuild the country. Fuji Heavy Industries, Tokyo Jidosha, Hino, Prince, Toyota, and Suzuki were among the companies who entered the automotive field. Many of their early efforts were based on western designs which had been copied or licensed. These companies had risen from the ashes of the zaibatsu, which had never been completely abolished.

In the postwar period, Japanese industry still held to the rules of the zaibatsu and didn't consider upstarts to be significant.

Enter Soichiro Honda.

Honda was born in 1906. He grew up helping his father repair bicycles in the little town of Komyo. At 16, he headed to Tokyo, 270 kilometers away, to take an apprenticeship at an automobile repair shop. At the age of 22, he opened a repair shop back in Komyo.

He took up racing and after a violent crash, he was convinced by his wife to retire from the sport. The repair business alone was not enough to keep him occupied.. This restlessness led to his venture into piston ring manufacturing in 1937.

A lack of formal education in automotive mechanics brought Honda to the Hamamatsu School of Technology. Robert L. Shook, in his book Honda: An American Success Story, stated that Honda was a poor student in his school days. "Honda reluctantly attended classes while continuing to run his business. Honda stubbornly paid little attention to anything in class that did not relate directly to piston rings. He took no notes, nor did he bother to take written examinations. The head of the school told him he would not receive a diploma if he refused to be tested. With that, Honda retorted that a diploma had less value than a movie ticket. 'A ticket will get you a seat in a movie theater, but a diploma won't get you a job!'"

In addition to the zaibatsu, Japanese industry relied heavily on the gakubatsu, described by Shook as "the 'good old boy' networking system that placed more emphasis on what school a person graduated from than on his or her ability to perform on the job." Honda had no respect for this system.

By the early 1950s, Honda had developed into an engine manufacturer. Honda's inventive spirit led the company to develop class-leading engines for Japan's motorcycle industry. The company sold its entire output of engines to Kitagawa to power its motorcycles. Honda's plants were geared toward production of 100 engines monthly. Kitagawa kept its output between 50 and 80 units a month, which caused congestion in the Honda production cycle and made for cashflow problems.

Honda met Takeo Fujisawa by chance in 1948. The two men shared a desire for long-term investment, a rare trait in post-war Japan. The two men agreed to work together, Fujisawa invested his money and took on the marketing responsibilities and Honda continued on the technological side of the business.

In 1952, Honda, who's products had expanded to include most motorcycle parts, terminated its agreement with Kitagawa. Honda's director of sales, Fujisawa told distributors that if they wanted to do business with Honda they would have to sell entire motorcycles. Many distributors stopped dealing with Honda but Fujisawa found new distributors to replace the vacated areas. This development would eventually lead to the two-tier marketing system which provides for exclusive territories to distributors and retailers.

That same year, Honda launched the Cub. This little motorcycle was Japan's post-war equivalent to America's Model T of 44 years prior; the Cub was small and easy to operate. Sales took off.

Honda's distaste of the zaibatsu and gakubatsu worked to his and his company's disadvantage. Without the power of an established zaibatsu, the Ministry of International Trade and Industry (MITI), the regulatory body for trade and industry in Japan, did not look upon Honda favorably when it came time for permits and resources. Outside of the gakubatsu, Honda was not favored by new college graduates. While the first area required playing by MITI's rules, the second problem was negotiated by Honda's unique perspective.

Former Honda chairman, Satoshi Okubo told Robert Shook, "in the early fifties, there simply were not enough jobs available with the major corporations for everyone seeking jobs.....I remember once when Mr. Honda addressed a group of new recruits, of which I was one, and he said 'Other companies may not consider you to be the cream of the crop but we believe in you. Feel free to leave our company whenever you wish'—letting us know that if anyone was not satisfied and felt that a better opportunity existed somewhere else that he should take it."

Okubo as well as executives Koichiro Yoshizawa and Tadashi Kume were rejected from other companies and yet they worked their way up to lead this company which would become one of the most powerful in Japan. Kume explained Honda as a "great teacher, and most important, he listened to everyone's ideas. He constantly was asking everyone for their opinions, so consequently people felt comfortable expressing themselves." Other Japanese companies did not work with this type of open policy which is said to have contributed to Honda Motor Company's success.

Soichiro Honda did much of market research for his products. This research went as far as traveling to races all over the world and examining the competition's motorcycles. Once a benchmark was set with a competitive product, Honda would take this information home and strive to top that mark. His attitude took Honda motorcycles from a disappointing finish in their first international race in 1954 to a manufacturer's team prize in the 1959 Isle of Man race in Honda's first year at that race.

Honda's racing successes converted to sales successes. In 1959, Honda had topped the Japanese motorcycle sales chart with 285,000 units. Two years later, Honda was selling at rate of 100,000 units a MONTH!

In defiance of MITI's desires, Honda announced its intention to enter automobile production in the early 1960s. MITI felt that Japan's automotive industry of ten manufacturers should be merged into two international majors (namely Toyota and Nissan) and one minicar manufacturer. Honda went ahead and introduced the S360 sports car anyway.

This desire to enter the automobile field took a similar path as the entry into the motorcycle field had before it. Honda entered racing in the Formula 1 series in the early 1960s. By 1965, Honda had achieved a first-place victory in the Mexican Grand Prix and several wins in Formula 2 the following year.

When it was decided for Honda products to begin exporting, the United States was chosen as a key target. The United States was, from all reports, singled-out as a market to avoid initially, concentrating instead on Southeast Asia and Europe. Fujisawa explained that the company was always to face its toughest challenges first, and America would prove to be that.

The first Honda motorcycles were introduced into the United States in 1959. The Japanese government, again, stood in Honda's way by restricting the amount of investment that could leave the country, cutting Honda's desired investment by 25%. And then came the problems with the product.

Soichiro Honda believed his products to be world class and informed the sales and marketing staff of this. The American public saw this differently when Honda motorcycles began blow head gaskets and lose clutches. Stunned by this, Soichiro brought the motorcycles back to Japan.

Working with the funds which the government had capped, Honda was able to re-engineer the motorcycles to meet the demands of the American consumer. Americans ride motorcycles at much higher speeds than Japanese riders which led to the failures on the motorcycles. Honda discovered the problem and corrected it in an amazingly short period of time.

By 1963, Honda was the top-selling brand of motorcycles in the United States.

Soichiro Honda's unique leadership has allowed the Honda Motor Company to become a world power in the automotive fields. Mr. Honda's views went counter to the direction of his own government and yet his company has prospered. With innovation developed by Mr. Honda as a basis, the Honda Motor Company has become a technological force in the motorcycle and automobile industries in Asia, Europe, and North America. Today, Honda stands as the largest motorcycle manufacturer and the 9th largest automobile manufacturer in the world.