Honda

Soichiro Honda, the son of a blacksmith, finished eight years of school, and then went to Tokyo in 1922 to serve as an apprentice in an auto repair shop. After a while he began spending his free time building racing cars, and was soon entering his creations in competitions.

In 1937 Honda started a business to produce piston rings, but his lack of familiarity with casting created serious obstacles for the enterprise. Honda solved the problem by enrolling part-time in a technical school, and by 1941 the company was supplying piston rings to Toyota Motor, which bought a 40 percent share of the company. During the war Honda also made parts for ships and airplanes.

After the war Honda sold the rest of the company to Toyota and used the proceeds to spend a year at leisure and then to start a new business. Operating under the grandiose name Honda Technical Research Institute, the company used recycled military engines to make motorized bicycles, a vehicle that was especially popular with the black marketeers at the time, given the shortage of automobiles.

After getting financial backing from Takeo Fujisawa, Honda renamed the firm Honda Motor Co. in 1948, and began designing a motorcycle. With Fujisawa running the business side and Honda the technical end, the company finished the prototype of what became known as the Dream Type D in 1949 and began production the following year. The Type D was not a great success, so Honda set himself to work on a new motorcycle with a more powerful (5.5 hp) engine. Designated the Type E, the new product was an instant hit. Demand was so strong that the company expanded its workforce at breakneck speed, hiring virtually everyone who responded to Honda Motor's constant help-wanted advertising.

The company was also buoyed by the popularity of the compact engine, the Cub Type F, that it created for giving motorized bicycles more oomph. Taking advantage of the cash flow generated by the advance payments made for many of its products, Honda Motor embarked on a bold expansion drive, which included the construction of two large new factories and the purchase of the most modern machine tools from the United States.

After overcoming some technical problems with his engines in the mid-1950s, Honda embarked on the development of a new motorbike that he thought would be the product to create a mass market for two-wheelers. The result was the 4.5 hp Super Cub, which many consider Honda's masterpiece. The bike had a light design that made it attractive to those who were not motorcycle enthusiasts. It had a polyester resin body, electric ignition, and was cheap to maintain.

The company, which was now the leading Japanese motorcycle producer, once again went out on a limb to expand its capacity. It built the largest motorcycle factory in the world. Honda Motor also began to enter foreign markets, focusing first on Southeast Asia, and then, with financial help from the Japanese government, on the United States. American Honda Motor Co. was established in 1959. One of the major goals of the U.S. operation was to change the image of motorcycles, which were commonly associated with delinquents and other anti-social types. Using an ad campaign that focused on the message "You Meet the Nicest People on a Honda," the company built up a large volume of business.

Honda Motor also entered the European market, establishing a moped factory in Belgium that was the first Japanese manufacturing facility in a developed country. During this period Honda and Fujisawa decided they wanted to add cars and light trucks to their product line. Returning to the activity of his youth, Honda moved toward the auto business by starting to design racing cars. Then he insisted that the company develop an air-cooled engine, despite the belief of most of his engineers that it would be difficult to control engine temperature and emissions without water cooling technology.

Honda had his way, and in 1967 the company introduced its first mass-produced automobile to the domestic market. The air-cooled N-360 minicar, the first Japanese car to employ front-wheel drive, was an immediate success. The company brought out the 1300, with a more powerful air-cooled engine two years later, but it was so expensive to produce that money was lost on each one sold. Honda pushed the company to concentrate on developing an even higher-performance air-cooled engine, but Fujisawa and the company's engineers, concerned that such a system would be unable to meet newly enacted emission controls in the United States, finally got Honda to relent.

The company faced a crisis in 1970 when the newly formed Japan Automobile Users' Union demanded heavy damages from Honda for the family of a man who had died in a crash while driving an N-360. This case helped create public controversy over defects in the products of all the car makers. Although the head of the Automobile Users' Union was later convicted of trying to extort large payments from the auto companies, the negative publicity surrounding the affair caused Honda's sales to plummet.

Honda quickly bounced back, however, with the introduction of the Civic, which contained the innovative CVCC engine that greatly reduced emissions. It also had the advantage of being able to use leaded or unleaded fuel (unlike cars with catalytic converters) at a time when unleaded gasoline was often unavailable. The Civic's enthusiastic welcome was a milestone for Japanese producers in the United States and for U.S. acceptance of small cars. At this high point of the company's fortunes, Honda and Fujisawa retired, and Kiyoshi Kawashima took over as president. In 1976 the company went upscale from the Civic and brought out the Accord, followed by the sporty Prelude.

In 1978 Honda began producing motorcycles in the United States (in Marysville, Ohio), and four years later the company became the first Japanese company to assemble automobiles in the U.S. The heavily robotized plant quickly reached its capacity of 150,000 Accords, and then doubled that capacity while beginning production of the Civic as well. Later Honda began producing engines for the cars in Ohio, once again leading the way in the extension of Japanese manufacturing in the United States. In 1985 output of Honda's Ohio operations surpassed American Motors, making the Japanese company in effect the 4th largest U.S. automaker. Taking into account both its Ohio output and its imports, Honda also shot ahead of Toyota and Nissan to gain the highest U.S. market share of any foreign-based carmaker. In 1989 the Honda Accord became the best-selling car in the United States--the first time a foreign car had ever attained that position. But after three years, it was surpassed by the Ford Taurus.

During this period Honda indirectly entered the European market by licensing Britain's Rover Group to use Honda designs to produce and market cars in Europe. The two companies later formed a further alliance to co-produce a larger car to be sold as the Honda Legend and as the Rover Sterling. (The relationship was phased out after BMW took control of Rover in 1994.)

In order to market a line of luxury cars in North America, Honda created a new division called Acura in the mid-1980s. The Legend was put under its auspices, along with the Integra. The Legend, introduced in 1986, was the leading wedge in the assault by Japanese carmakers on the high end of the market. It was soon overshadowed, however, by Toyota's Lexus and Nissan's Infiniti entries. Honda then went after another segment of the auto market by announcing in late 1990 that it would produce a station wagon version of the Accord in the United States.

Amid the recession of the early 1990s Honda's U.S. production began to slump, and the company did not come near reaching its ambitious goals for exporting U.S.-made cars back to Japan. Faced with problems both at home and in its largest export market, the company in 1991 underwent a management reorganization that gave top officers more direct control over auto operations.

Honda continued to lose ground as the U.S. market moved away from smaller cars toward minivans and sport-utility vehicles. Eventually, the company decided to go with the flow. It began producing SUVs and minivans at its plant in Ontario, and in 2001 it opened a plant in Alabama (with the help of $248 million in state and local subsidies) to take over production of its Odyssey minivan for North America. The plant later started making SUVs as well. In 2004, however, Honda had to recall hundreds of thousands of those vehicles with transmission problems, at a cost of some $369 million.

The company tried to bounce back with the introduction of its first U.S. pickup, the Ridgeline, but rising oil prices caused it to turn back to smaller cars such as its hybrids and the fuel-cell-powered vehicles it has been developing. In March 2009 it took direct aim at Toyota’s popular Prius with the introduction of what it called “the world’s first affordable hybrid.” In July 2009 Honda announced that it would expand its line of hybrids, and predicted that all its vehicles could be hybrids in 20 years’ time.