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Tuesday, Aug. 11, 1998
No mega-merger on horizon for road-warrior Honda
Mega-mergers and alliances appear to be an increasingly popular solution to intensifying global competition. But the chief of Honda Motor Co. says his company will pursue an independent path.
Hiroyuki Yoshino, Honda's new president and CEO, is not interested in forming alliances or merging with other automakers just to secure large production capacity and worldwide sales volume.
"General Motors Corp. is such a huge company, but its share in the United States is not growing strongly," Yoshino said in an interview, adding that Honda's Accord and Civic were among the top four best-selling vehicles on the U.S. market in 1997.
"If the size of a company and its sales volume are large, it may be able to maintain low prices for its products, but to be able to attract more customers is totally different," said Yoshino, who took the company's helm in June.
The merger between Daimler-Benz AG and Chrysler Corp. announced in May prompted many carmakers to seek suitable partners to best utilize their resources. But both Yoshino and his predecessor, Nobuhiko Kawamoto, have clearly stated Honda will remain independent.
To be competitive, Yoshino said, it is necessary to have production and sales bases in the world's major markets -- the U.S., Europe, Japan and other parts of Asia. "Neither Chrysler nor Daimler-Benz have production bases in Japan and Asia," he said. "But we are already doing that."
There is a reason for Honda's confidence. After struggling through the collapse of the bubble economy, Honda has attracted a younger generation of consumers with the introduction of new sports-utility vehicles and has been seizing larger shares not only in the U.S. market but also domestically.
Last year, Honda's domestic sales reached the firm's longtime goal of 800,000 units despite the overall slump in the economy, outstripping Mitsubishi Motors Corp.'s 684,741 units and unseating the nation's former No. 3 automaker from the position it had held for the past decade.
The price of Honda's shares even surpassed that of Toyota, the nation's No. 1 automaker, for the first time in November 1996.
The Capa, Honda's new small wagon that debuted at the end of April, has received good customer response so far. Sales exceeded the initial monthly target of 6,000 units in June, and the company has sold 20,924 units in the first three months of production.
Amid the continuing economic weakness, however, Honda has revised its initial sales target of 810,000 units for 1998 to 764,000 units.
In September, Honda will introduce another small wagon and begin importing the four-door sedans Inspire and Saber built at its U.S. plant. It will also announce two new minicar models in October. These new models should stimulate the domestic auto market, Yoshino said.
Like other "Honda-spirited" predecessors, Yoshino, a graduate of the University of Tokyo's engineering department, is enthusiastic about future technologies.
The 58-year-old former engineer said that following in the footsteps of Toyota's Prius, Honda will start selling a hybrid car that uses an electric motor and a gasoline engine next summer. Yoshino also said his firm aims to put its first fuel cell-powered car on the market by 2003.
"The speed of change in the industry is so drastic. If we merged with others and became a big company, we would not be able to move expeditiously," Yoshino said.