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How Honda Started Became a $50.4 BillionCompany. The Honda Motor Company, Ltd. is a Japanese public multinational conglomerate corporation.   The Honda brand is largely recognized as a manufacturer…

How Honda Started

Became a $50.4 BillionCompany. The Honda Motor Company, Ltd. is a Japanese public multinational conglomerate corporation.

The Honda brand is largely recognized as a manufacturer of motorcycles, automobiles,power equipment and aircraft. Since 1959, Honda has been the largest manufacturer of motorcycles in the world.

Honda has also been the largest manufacturer of internal combustion engines by volume, producing over 14 million engines each year.

How Honda Began

This story goes back to before 1937 when Honda’s founder, Soichiro Honda worked as a mechanicat the Art Shokai garage where he tuned cars

and entered them in races.He always had an interest in automobiles,

and in 1937, Soichirofounded the Tokai Seiki(Eastern Sea Precision Machine Company) working out of the Art Shokai garage to make piston rings for engines.

Initially, Tokai Seiki experienced failuresbut eventually secured a contract to supply piston rings to Toyota.It lost that contract, however, due to the poor quality of its products. It took a better understanding of Toyota’s quality control processes which Soichiro learnedafter attending engineering school (without graduating) and visiting several other factories around Japan, for Tokai Seiki to finally make piston rings acceptable to Toyota. Tokai Seiki was able to mass-produce acceptable piston rings using automated processes with very low skill requirement for its employable staff by 1941.

At the start of World War II, Tokai Seiki was absorbed by the Ministry of Commerce and

Industry, later called the Ministry of Munitions.Toyota bought 40% of Tokai Seiki and Soichiro

was demoted from president to senior managing director.

Soichiro assisted in the war by applying his automation expertise to other companies for

the production of military aircraft propellers. During the war period, Soichiro established

relationships with the Imperial Japanese Navy,Toyota, and the Nakajima Aircraft Company,

that proved useful after the war.

Tokai Seiki’s Yamashita plant and Itawa plant,respectively, were destroyed by a US B-29 bomber attack in 1944, and the 1945 Mikawa earthquake.Soichiro salvaged what he could of Tokai Seiki and sold it to Toyota.

With his entire workforce of 12 men, theymbuilt and sold motorized bicycles, improvising

with war surplus Tohatsu radio generator engines.

The surplus ran out and they began buildingtheir own engines and giving them to customers to attach to their bicycles.They called it the Honda A-Type.

to US$5,000 today. The fund was then used to incorporate the Honda Motor Company, Ltd.

Soichiro hired engineer Kihachiro Kawashima, and businessman Takeo Fujisawa to complement his technical inclination and provide much-needed

business and marketing expertise. By 1949, the Honda Motor Company, Ltd. made

and released its first complete motorcycle into the market.

The D-Type which was the first Honda to go by the name Dream had its frame and engine made by Soichiro. In June 1963, Honda’s first production automobil was introduced. The T360 mini pick-up truck that came roughly four months before Honda’s first production car, the S500 sports car which was revealed in October.

That same year, a Honda engineer, Tadashi Kume designed a 1.5L V12 engine which was

produced for use in Formula One racing.By 1964, Honda Motor Company had grown to

become the world’s largest manufacturer of motorcycles.

The Dream was the realization of an ideal for Soichiro who believed continuous improvement,

excellent service driven by accountability and integrity were the key to lasting success.

Over the subsequent years, Honda focused on expanding its product line, improving its

products to stay competitive or ahead of its counterparts, as well as expanding its operations

and exports to various countries around the world.

This led to the introduction of several successful brands such as the Acura in 1986 and the NSX

supercar in 1991. In 1990, Honda successfully established its elfas Honda of America Manufacturing Inc. in Ohio.

Soichiro’s Death & Honda’s Expansion

After the death of Soichiro in 1991 and the resignation of ShoichiroIrimajiri in 1992,

Honda Motor Company, Ltd. found itself being outpaced by its competitors in product development. It was reported by Japanese media in 1992 and 1993 that the Honda Motor Company was at risk of a hostile takeover by Mitsubishi Motors.In response, CEO Kawamoto practically rebranded the company in all but name.

He transformed its corporate culture and resolved its resources towards market-driven product

design and development. He even ended the company’s participation in Formula One after the 1992 season in order to foster a more environmentally friendly image for the company as well as cut the extra costs.

The market-driven approach led to a refocusing away from models not popular with the public,

which in turn led to the development of successful models such as the first-generation Odyssey and the CR-V.

In 1995, the Honda Aircraft Company was established as a wholly owned subsidiary of the Honda Motor Company, Ltd. to produce jet aircraft under Soichiro’s name.

This was a testament to its full recovery and excellence.In 2001, Honda became the second-largest automobile manufacturer in Japan, and by 2015, Honda was the eighth largest automobile manufacturer in the world.

Honda went further and spared no expense in its ad campaigns for its international market.

In 2003, Honda released its Cog advertisement masterpiece in the UK and on the Internet.

Cog is still regarded as one of the most impactful commercials of the 2000s.

In 2004, they produced the Grrrr ad.In 2005, Impossible Dream.

On and on, Honda has continually maintained a high level of customer engagement and awareness which has proven to be both critically and financially beneficial to the company.

In Japan, since 1978, Honda implemented a model to diversify its sales distribution channels to make it easier for customers to locate the product(s) they want. However, by 2006, the Honda Cars dealerships were established which offered all the Japanese market Honda cars at all Honda distribution locations, and the diversified distribution chains were discontinued.

Honda maintained the poise of delivering high-quality products and services while leaning towards the environmentally friendly.In 2010, the entire 33-car starting field of the Indianapolis 500 race was powered by

Honda engines, and during the running of the Memorial Day Classic, there were no retirements

due to engine fault up to the fifth consecutive race! Honda had also never built a V8 engine for

passenger vehicles despite being known as an engine manufacturer.

In 2008, it canceled its V8 production plans for its larger Acura sedans citing environmental and worldwide economic concerns as reasons for the cancellation.

Honda has shown that it can evolve and adapt to the times with a focus on high-quality

eco-friendly consumer products.

From its compressed natural gas Honda Civic GX which was rated the cleanest-burning internal

combustion engine in the world by the U.S. Environmental Protection Agency in 2001, to its flexible fuel models, to its hybrid and electric models, Honda continues to invest in consumer-friendly products for the current and next generation of customers.

By 2010, 89% of the Acura and Honda car brands that were being sold in the United States

were built in the North American plant locations. Honda in the recent times. Honda now has its assembly plants around the world in the United States, China, Canada, Europe, Asia and so on from which its internationally sold brands such as the Fit, Civic, Accord,

Insight, CR-V, CR-Z, Legend and the two versions of the Odyssey are manufactured.

As of 2018, Honda has annual revenue upwards of $138 billion with its market capitalization

valued at US$50.4 billion in October 2018.

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Suman is an engineering graduate, who loves to write and read.