Texas Honda Review

"If your opponent is of choleric temper,
seek to irritate him.
Pretend to be weak,
that he may grow arrogant."

Sun Tzu, The Art of War, 6th century BC

Honda Motor Company (HMC), like its baby-boomer buyers, was said to be having a midlife crisis.

Critics assailed Honda for not having the big SUV's with V8 engines that Texans would never stop wanting. They asked: how much growth can Honda generate in the US without a real truck?

Often, strength is perceived as weakness.

Then boom, in the summer of '06, and again in the fall of '07, oil prices spiked (surprise), and GM, Ford, and Chrysler lost many billions as a result of those very same V8 SUVs and pickups.

Hondas, especially the thrifty and good looking Civic, had inventory levels as short as 1 day.

Honda is an engineering company characterized by technology innovation, with reliable, quality, high value products across a broad range of global markets. It stands in stark contrast to marketing driven companies that subsist on short lived fads, billion dollar ad campaigns, and heavy sales incentives.

Yes, Honda and Toyota are in a race to produce the most boring, thrifty, and reliable cars on the planet.

And winning.

The Little Engine that Could

Hondas global conservative strategy targets future growth on a very wide front.

The little motor company has a remarkable 40 year record of achievements in vehicle production, emissions standards, product longevity, and fuel economy.

Honda has become the largest engine-maker in the world by focusing on the technology of internal combustion engines.

The number 3 brand in Japan is 5th in the US, holding about 9% of the market in the fall of 2006.

Honda's market share rises and falls with fuel prices and competitor's incentives. Average 2006 incentive spending was only $720 per vehicle.

Toyota has boomed because it can build everything consumers desire. Honda bases its entire lineup on variations of the front-wheel-drive V6 Civic and Accord platforms. This has slowed the marque's stateside growth during periods of lower fuel prices.

I expect the future to be very unkind to the Truck/SUV focused builders. What is happening to the US not-so-big-3, who are repeatedly caught making gas guzzling barges the public can't afford without mortgage refinancing, will continue and accelerate.

In the near future, no more than 10 years away, a fuel and financial crisis will hit America which makes the gas lines and rationing of 1978 look like fun.

There will also be a panic attack on carbon emissions when the global climate crisis becomes evident to even the most ardent ostrich.

Honda owns the sweet spot in the auto market; safer, smarter cars with powerful, but more fuel efficient drive trains.

4 cars in top 10 most researched are HMCs.

Honda is Different

Since 1948, Honda Motor Co., Ltd., has led a life based on frugality. Isolated from the bank-centered post war Japanese business climate, Honda developed a unique corporate culture.

Shunned by Japan's keiretsu-controlled big capital, hungry for cash, the little motorcycle company surprised everyone with it's adaptability.

I remember when the Cub 50cc motorbikes were marketed to baby boom America in the early 1960's.

A pop music hit accompanied the new toy: "Little Honda."

You didn't need a motorcycle license, helmet, (or riding skills) to rent the sporty little bike. Any kid could afford to rent one for the day.

I did.

Didn't buy a Honda, bought a Yamaha 250cc Big Bear Scrambler, brand new, in 1965.

Today I wouldn't ride anything but a Honda, world's best motorcycle (VFR800fi).

The early Honda cars were 600 cc motorcycle-based jokes amid the ground pounding American muscle cars and $.30 gas, but market penetration was eventually achieved.

Despite the conservatism, risk adverse does not describe the first Japanese car maker to build vehicles in the United States.

HMC is best described as an engineering or engine company rather than a car company. The venture into aviation, Hondajet, illustrates this.

Executives in the US tend to come from finance and marketing backgrounds. At Honda, President and CEO Takeo Fukui is an engineer.

The US graduates about 60,000 engineers annually, compared with something like 800,000 in the far east. MBA's measure quality in the marketplace, engineers build it.

Quality: I think I Can

In the opinion of texas-cars-and-dealerships.com, Toyota/Lexus, Honda/Acura, and BMW, are the world's best mass-market cars.

In the J.D. Power and Associates 2006 Customer Retention Study, Hondas ranked 3rd out of 37 makes. An astounding 60.3% of those surveyed returned to purchase another vehicle.

That little Honda, with its humble origins, should rise so quickly to the top, surprises many. Technical innovation and quality are the "secret."

Traditional US quality control tended to focus on the assembled product, running the line fast and never stopping for quota-busting defects.

I worked briefly on the assembly line, and know its hardship under poor management.

When that line speeds up, there is a strong tendency to let a mistake float away, to keep from falling behind. Cars were inspected after they were built: only those with visible flaws would be repaired.

If there was a consistent problem, it would show up in warranty claim numbers, then get attention.

In the Japanese system, even when transplanted to Ohio, individual workers are responsible for quality, and can slow or stop the process if they see a problem.

Honda and Toyota use well-treated, motivated employees as the core of their quality system.

Honda has been more successful at transplanting "the Toyota Way" than Toyota itself.

Absenteeism is unbelievably low, fewer substitutions mean less defects.

Flexible weld robots have replaced hard tooling, allowing various models to be built on the same platforms, with tight panel gaps and few other defects.

The new car consumer can feel the quality to price ratio, as does the resale market. Automotive Lease Guide projected residuals for 2007 vehicles list Honda as best among all non-luxury brands with an astonishing 53.7% value retained after 5 years.

Acuras are similarly regarded in the resale marketplace.

While these cars are considered "to small" for Americans, I believe a time is coming when this will no longer be true.

Tried pricing used Hondas? The retention of value is unbelievable.

Is Honda perfect? Hey, this is the automobile business, buyer beware. Honda has settled, without admitting wrongdoing, a class action lawsuit alleging odometer fraud. Some Hondas show from 4 to 11% more miles than they have actually run.

Why would a manufacturer do this? It lowers warranty claims and inflates fuel mileage. A reputation for running long miles follows.

Honda is not alone in this. The class action trial lawyers are going after Nissan next.

Product Pipeline

Honda, which may surpass Nissan Motor Co. as Japan's second-largest car builder this year, has a narrow product line-up, especially at the upper end.

This is a serious global brand, so many Texas buyers will find the Hondas smallish.

The Civic and Accord sedans, the Fit hatchback and the CR-V crossover form the core of HMC's sales. They are way ahead of Ford/GM in developing the globally viable products that define the car companies of the future.

No builder can afford to build and market low volume vehicles for regional markets, even for big North America.

Honda's flexible manufacturing system reduces the time and money required to produce to launch new models.

Honda's powertrain strategy centers on the issues of the future; air pollution, greenhouse gas emissions, and energy sustainability.Those who say the company needs a rear-drive V-8 to compete, in my always very humble opinion, do not see the future clearly.

With many US models still running pushrod, cam-in-block 1970's technology motors, the little engines that can are carefully defining the future.

Carbon dioxide-free fuel cell technology will be the rage in 10 years or so. Honda will lead in fuel cell technology.

Dealer Network

Honda came to the US from outside the Japan, Inc. "keiretsu" business model, but some corrupt business practices persisted, alienating dealers here.

Around the year 2000, a campaign was launched to spruce up the image and improve US dealer morale. The result is the now familiar blue cylinder and improved dealer and customer satisfaction.

While complaint levels are low, there are some low quality Honda dealerships.

Texans are advised, as with every make, to shop the dealer harder than the deal.

Demand continues to exceed supply for Civic and Fit. Honda recently announced its plan to spend $1.18 billion on new plants in the United States, Canada and Japan.

Hondas for Texas

This is one of the strongest brands in the business.

Civic, moving nearly 30k units a month, gets texas-cars-and-dealerships.com highest recommendation for economy minded Texas buyers.

Honda's conservative, broad, and ambitious strategy, will yield numerous gaffes. For instance; the Insight hybrid was before it's time and was upstaged by Toyota's Prius, Hondajet is a risky business proposition. Buyers should stick to the popular offerings.

But early entry into tech fields given only lip service by other manufacturers means Hondas will have the future built in.

Fuel cells, natural gas, zero emissions, and VTEC diesel will all play a role in the automotive future.

HMC will be ready when today's SUV-roadrage fad is an old Mad Max movie.

$5/gallon gas and carbon emissions limits are coming. Short sighted reliance on obsolete technology and heavy frame-rail construction has Ford, GM, Chrysler, and others, in big trouble.

When they are gone, Honda will build the transportation system of the future.

News-Blog Updates for Honda

04/04/08 Honda Sweeps Vincentric Top Ten - Value and Reliability

11/12/07 2008 Honda Accord Coupe Appears at Dealerships

10/31/07 Honda Builds the Real Future; Prius-like Hybrid, Fuel Cell Car, Accord Diesel

10/25/07 Honda Reports Strong 3rd Quarter

10/24/07 Future Cars: Battery Electric vs Fuel Cell

Honda Dealer Profiles

Gillman Honda Houston

John Eagle Honda Houston

Goodson Honda North Houston

Baytown Honda