The Honda Motor Company first entered the European market in the early 1960s through the sale of motorcycles. Honda’s motor vehicle sales in Europe have been relatively poor, especially in the previous five years. And Honda executives wonder why their global strategy is sputtering.
History of Honda and Automobile Industry
In 1946, Souichiro Honda founded the Honda Technology Institute. The Company started as a motorcycles producer and by the 1950s had become extremely successful in Japan. In 1956, Honda entered the US market and was able to position itself effectively. In the early 1960s, the company commenced automobile manufacturing and participated in Formula F-1 to assist its technology development. Until the early 1990s, the company experienced serious organizational mismanagement resulting from tension between the technology side and the marketing sales side. The automobile industry worldwide is in the mature stage of its life cycle. In the late 1990s, industry experts stated that only six or seven companies would remain global players, while other companies would be forced to sell in niche markets. Unlike their European and American counterparts, Japanese automobile companies, including Honda, did not adopt the M&A strategy for expansion. To remain a global competitor, Honda instead expanded its operations by setting up plants in regional markets.
Honda in Europe
Currently, Honda has five regional operations : North America, South America, Japan, Asia-Oceania, and Europe. There are number of reasons for low sales in Europe. Honda entered the European market rather late, and its first production facility in the region was built in 1992, at a time when Honda was still only a minor player in the Japanese market. Prior to 1992, Honda Europe was forced to imports its vehicles from the United States, making its impossible for the company to aggressively attack the European market. The important reason for the...