Honda is one of the leading automotive brands with a worldwide footprint. The company is headquartered in Japan and sells its merchandise worldwide. The company has launched several wonderful automotive and motorbike models which are widespread in both Western and Asian nations. In recent times, the company enjoys a gentle progress in sales as a consequence of elevated sales. Honda's business is divided into four segments and Honda's largest phase is the automotive enterprise. The corporate can also be aggressively investing in R&D to increase its market share within the international automotive market.
North America, and primarily the USA, is Honda's largest geographic phase. The corporate also has a robust presence within the home market. The automotive business is presently undergoing a serious transformation and the event of AI-like know-how and unbiased driving has opened up new opportunities for automotive corporations. Honda also has a big number of production and assembly amenities worldwide. In america alone, the company has seven places. The automotive business has entered a challenging part in 2019. Even within the main markets, sales have started to decline within the first half of the yr. Leading automotive manufacturers have partnered to seek out quicker progress and to answer altering market dynamics. Honda has maintained a robust place within the motorbike business in Asia. In terms of automotive gross sales, its position in Asia and China is weaker than that of its leading rivals.
Read extra about Honda – its Strengths, Weaknesses, Alternatives and Threats in SWOT Analysis 2019.
Honda Mild Jet. Img src = Honda Press Launch.
Honda has dominated the automotive business with a robust picture. The corporate's give attention to know-how, buyer expertise and product innovation has led to a robust brand stock. In addition, Honda has a high degree of brand consciousness in North America and the Asian and European markets. Robust brand awareness has additionally led to a better market share for the brand. Of the various elements contributing to model equity, Honda's advertising technique has additionally played a key position in serving to the corporate obtain a robust aggressive edge within the automotive business. Honda makes use of a number of advertising channels, corresponding to its distribution network, digital channels, and other promotional methods, resembling automotive exhibits, to advertise its brand and its merchandise. Specializing in innovation has also produced overwhelming outcomes for Honda, as it’s one of probably the most reliable manufacturers in the USA, one of the world's leading car markets.
Honda's worldwide distribution and reseller community has helped it keep a robust presence in key markets around the globe. The corporate additionally invests in buyer engagement and an awesome buyer experience. These points additionally improve shopper confidence within the model and its products. The automotive business has entered a difficult part and the concentrate on passenger safety and customer experience can also be delivering higher results.
Robust presence within the US market:
Honda is one of the main automotive manufacturers in the USA, the place its focus is on mobility in the robotic and AI has helped it achieve larger market share. Demand for its products, together with the posh brand Acura, has continued to grow. Honda has established seven manufacturing and meeting crops in america. These crops are situated in Alabama, Ohio, Georgia, North Carolina, South Carolina and India. There are 2 Honda crops in Ohio. In line with sources, Honda's market share in the USA was 9.1% in 2018. Internet gross sales in the USA have been $ 7,480.four billion in 2019. Honda can also be the primary Japanese automaker to start out production in america. It started native automotive manufacturing in america in 1986 with the Honda Accord. Later, Honda expanded its production to include mild truck fashions. It launched the Acura model in 1986 and established an exclusive community in america. As well as, america is the most important single market for Honda merchandise, accounting for more than 45% of the model's gross sales revenue in fiscal yr 2019. The company sells a wide range of automobiles, including passenger automobiles, mild vans and mini-vehicles. Honda's passenger automobiles embrace Accord, City, Civic, Crider, Fit / Jazz. Its mild vans embrace CR-V, Freed, Odyssey, Pilot, Vezel / HR-V, XR-V. The N-BOX is a Honda miniature car. Along with these automobiles, Honda additionally manufactures a variety of bikes. Bicycles manufactured by Honda embrace tourer bikes, sports travel bikes, journey bikes, roof bikes, as well as scooters and mountain bikes. Simply as Honda automobiles are more in style in the USA, Honda bikes are very fashionable in the Asian market. Motorcycles symbolize solely a small proportion of the brand's revenue, and their high gross sales imply robust brand consciousness in the international market. The Asian market has seen large progress in recent times. Economic progress has led to an increase in middle-class buying energy and a rise within the worth of biking clients priced throughout the middle.
Honda bikes are economically comparatively economically priced compared to other sports and mountain bike models. gross sales in Asian market. That is also the rationale for the excessive reputation of these bicycles in Asia. In addition, Honda's sales and service community on this market can also be robust, which has improved the client experience and led to larger sales of Honda motorbike products. In america, in depth protection and competitive pricing have resulted in Honda's overwhelming monetary performance. In addition, with its premium Acura vary, different automobiles are competitively priced. They are thought-about to be highly environment friendly in their efficiency and match into the life-style of trendy clients. Three of Honda's automotive models have been among the many prime 20 in the USA in 2018, together with the Honda Accord, Civic and CRV. Honda's in depth vary of automobiles covers the altering wants of its clients and is nicely suited to the totally different life of totally different buyer segments.
Other Honda merchandise embrace Honda Jets and engine products. The recognition of mild jets manufactured by Honda has grown rapidly. These lightweight showers are fashionable for his or her progressive designs and classy seems to be. When mounted on the wings, these jets present improved aerodynamic efficiency. Honda mild jets turned best-in-class in the first half of 2019. The corporate delivered them until 17 August 2019. With the exception of decreasing wear during high-speed flights, the blade engine mounts configuration additionally allows for gasoline effectivity and quicker flight speeds. Supply of Honda Jet plane began in December 2015. Honda also manufactures a variety of engine merchandise together with common objective engines, turbines, water pumps, garden mowers, journey mowers, robotic mowers, brush cutters, tillers, snow throwers, outboard motors. , walking aids, and moveable battery inverter energy supplies. During fiscal yr 2019, the Honda Group's income from electrical products and different businesses was EUR 350.9 billion, compared with EUR 347.0 billion the earlier yr.
Robust motorbike gross sales in Asia:
Financial progress within the Asian market has accelerated in recent times. China has emerged as the most important automotive market and has turn into the preferred funding vacation spot for all main automotive manufacturers. Most of the main automotive corporations concentrate on regionally producing with a purpose to improve production in China and management operating prices. The success of Honda automobiles has been biggest in the USA, followed by Japan's house market. Nevertheless, in the case of motorcycles, demand and sales for Honda bikes are strongest in Asia. Compared to North America, Europe, Japan or other elements of the world, Honda bikes have the very best gross sales in Asia. In 2018, the Honda Group bought 18,224 million models of bikes within the Asian market and generated revenue of $ 1,375.2 billion. Motorbike revenues have been a small portion of the company's complete income in 2018 (only about 13%), however excessive unit sales show robust reputation and brand equity. It also demonstrates robust model awareness within the Asian market.
Honda's robust international network of manufacturing and assembly crops, distribution community and regional workplaces of the corporate can also be a big power of the model, which has helped it keep a robust international presence. All through the globe, from Asia to Europe and North America, the company has maintained a robust presence by means of its distributors. Its core market in the USA has seven manufacturing and assembly crops and a dense gross sales community to satisfy the excessive demand out there.
There are ten Honda manufacturing and meeting crops in Japan and 9 in China. Along with its 30 important factories, the company also has smaller factories and regional workplaces all over the world. The company is headquartered in Tokyo, Japan. The Honda Group as an entire includes 435 corporations, of which 364 are consolidated subsidiaries and 71 are subsidiaries valued using the equity technique. Weaknesses:
Weak Automotive Sales in Asian Market:
The Asian market is the main playground for car brands. All major automotive corporations are investing in constructing native infrastructure in China and different Asian markets. Many of them have partnered with native Chinese language automotive corporations to develop their gross sales and manufacturing network there. China is now the most important automotive market. Nevertheless, Honda's penetration of the Chinese automotive market is weak compared to other main rivals akin to Volkswagen, Ford or Basic Motors. Until Honda increases its penetration of the Chinese market by producing new models regionally to satisfy native demand and shopper expectations, it might lose competition with other leading automotive brands. Although demand in the Chinese language market has fallen barely in 2019, it’s nonetheless the most important market for automotive corporations. Honda can develop new models solely for Chinese shoppers. It will assist Honda strengthen its customer base in the local market and fight competitive pressures while preserving manufacturing costs underneath control.
High Dependency on US and Japanese Core Markets:
Apart from your complete Asian market, Japan accounted for less than 25% of Honda's income in 2018. North America, the most important marketplace for Honda products, accounted for more. more than 50% of the corporate's revenue in 2018. America alone accounted for more than 45% of the Group's income. Though Honda has greater sales within the US and Japan, the corporate is essentially dependent on these two markets for sales. Given the restricted presence on the Chinese language market, notably within the automotive phase, the corporate have to be depending on its different two foremost markets. Its motorbike sales in Asia are greater than in different areas, but they characterize a really small part of its revenue, which is less than 15% of the full. In Europe, too, the company has continued to lose market share. So as to scale back the dependency of the 2 fundamental markets, the company should improve its penetration into China and the main European markets.
Demand for electrical automobiles is rising worldwide. . Individuals want fuel-efficient automobiles with no dangerous emissions. The coupling price of hybrid and electric automobiles has increased quickly. China is the world's largest marketplace for electric automobiles. In 2018, gross sales of plug-in automobiles worldwide together with plug-in hybrid automobiles and all electrical automobiles totaled 2.1 million models. Plugin hybrids accounted for 69% and electrical automobiles for 31% of complete 2018 sales. China was the most important market with 1.2 million automobiles bought by electrical automobiles and extensions. 56% of all plug-in car sales in 2018 have been in China. Also within the US, sales of extensions elevated by 79%. Tesla bought greater than 128,000 models of the Mannequin three in the course of the first and second quarters of 2018. Tesla, together with the Mannequin S, X and Mannequin 3, bought more than 158,000 EVs in the course of the first two quarters of 2018.
Honda has remained a lot much less aggressive. getting into the EV market compared to different leading automotive brands. Different manufacturers are aggressively investing in add-ons and electrical automobiles. Manufacturers like BMW, Audi, Ford, Toyota, and so on., all spend money on electrified fashions and type partnerships to grow their share quicker in the electrical car market. Nevertheless, Honda's pace is far slower on this area.
Asian market and mainly China:
The Chinese language market has grow to be the world's largest automotive market. Both the USA and China are leading automotive brands. Automotive corporations are growing their penetration of China by means of native partnerships and funding in local manufacturing infrastructure. Honda's gross sales are excessive in North America, however its penetration within the Chinese language market continues to be comparatively low. In different Asian markets, gross sales of Honda motorcycles are excessive, but Honda automobiles are low. Honda has retained most of its concentrate on the house market and the USA. As China's potential within the automotive and motorbike markets grows, not leaving it represents a big loss of alternative.
In addition to investing within the progress of its electrical automobiles, Honda also needs to give attention to expanding its manufacturing and gross sales community. In China to realize overwhelming gross sales there. The automotive business will experience a slight decline in 2019, but the Chinese language market continues to be full of alternatives. In addition to China, Honda has vital progress alternatives in other Asian markets akin to India, Malaysia, Singapore, and so forth.
only for core merchandise and core markets, Honda should attempt to increase its product range with extra hybrids and EVs and spend money on the newest know-how for a smoother transition into the subsequent era of mobility.
Investing in autonomous driving know-how also proves to be worthwhile for Honda. All leading automotive manufacturers are investing in autonomous driving know-how. Many of them have collaborated on this know-how. Tesla's autonomous driving know-how is considered to be probably the most advanced and protected. Investing in autonomous driving know-how may also help improve demand for present Honda models. Autonomous driving and Internet commerce are seen as the longer term of mobility. The transport business goes via a period of change. With a purpose to keep demand and gross sales of products, an organization must spend money on these applied sciences. Related automobiles with digital interfaces and automated driving options decide the longer term of mobility. These methods can improve the attraction of Honda's portfolio.
The extent of regulation in the automotive business has elevated so much everywhere in the world. In america, legal guidelines are strict and require corporations to pay specific consideration to compliance, including passenger safety, product quality, and labor. With larger regulation, limitations to entry and exit are greater and quicker progress may be troublesome. Nicely-established players type alliances for progress and enlargement around the globe. As well as, the level of fines has elevated and may be a big proportion of the model's internet income. From the US to China and Europe, legal and regulatory businesses have issued stricter laws. Businesses also must be careful about tax legal guidelines and tariffs. Many worldwide corporations have complained that rising tariffs are damaging their companies.
Growing competitive strain also poses a serious menace to automotive brands. Larger competition has led to larger progress pressures and increased operating costs. In 2018, Honda invested greater than $ 7 billion in research and improvement. In addition, with growing competition, manufacturers also have to focus more on advertising, know-how and product innovation. Some of Honda's main rivals embrace Ford, Toyota, Volkswagen, BMW and Hyundai. All of Honda's rivals make investments closely in R&D and advertising. They’re aggressively investing in the newest know-how and market enlargement. Honda's market share is excessive in Japan and the US, however weak in Asia. Greater competitive strain has also increased the operating costs of the company. Honda's working costs increased 4.four% to EUR 15 162.2 billion in 2018 in comparison with the previous yr. Its sales costs additionally increased 4.8% in 2018 compared to last yr.
Growing Raw Materials and Labor Prices:
Raw material and labor costs have increased rapidly in recent times, reflecting Honda's rising operating costs. As well as, because of the growing give attention to customer expertise and product quality, the company is investing extra in human assets and top quality raw materials. These elements improve prices. Nevertheless, these costs are vital given the level of competitors in the business and the growing expectations of clients. Honda should keep its market share and the leading position it must spend money on both. As competitors in the automotive business grows, so does the necessity for gifted staff.
Honda is one of the main automotive manufacturers on the earth market. It has a big market share in both Japan and the USA. Nevertheless, Honda might have to concentrate on the Chinese market to extend sales there. Its light-weight Honda Jet has also turn out to be successful and was one of the best-selling mild jets within the first half of 2019. Honda bikes are common in the Asian market. Honda's concentrate on fashion, performance and aggressive pricing has helped it achieve a big market share in the Asian motorbike market. To realize quicker progress, Honda must concentrate on technological innovation and spend money on state-of-the-art know-how akin to AI, autonomous driving know-how and digitalisation. As clients' life change, so do their expectations and demand.
The global automotive market has entered a challenging part in 2019. Demand and sales have decreased in comparison with last yr. Nevertheless, demand and sales of electric automobiles will improve additional in 2019 and this development is predicted to continue within the coming years. Tesla's gross sales in 2019 present that electrical automobiles have grown in reputation. Honda also needs to give attention to growing the range of electric automobiles and hybrids. This alteration has come somewhat all of a sudden, benefiting manufacturers that have invested more aggressively in electrified automobiles. Buyer experience also needs to be a precedence for Honda. Honda has a wide range of merchandise and provides the company some added benefits. Nevertheless, it should not be left after the know-how competition. Investing in unbiased driving and electrical automobiles that help it stay in place as new developments and know-how move into a brand new era.
HONDA MOTORS Annual Report 2019.