Honda’s mini-car sales are sluggish. Surpassed by Nissan that does not develop such cars of its own
4, 23. 2007
Honda Motor Co., Ltd. is making haste in dealing with its mini cars. Honda has long kept the third place in the mini-car sales race in terms of annual sales. In January 2007, however, it was ranked forth after Daihatsu Motor Co., Ltd., Suzuki Motor Corp. and Nissan Motor Co., Ltd., and fell further to the fifth place in February after Daihatsu, Suzuki, Nissan and Mitsubishi Motor Corp. The mini cars sold by Nissan, which has been ranked third for the two consecutive month, were manufactured for Nissan by Suzuki and Mitsubishi under an OEM (original equipment manufacturing) arrangement. Honda’s dealers were shocked by their defeat by Nissan, which does not produce mini cars of its own. They are worried about their future.
Honda will lag further behind Toyota if its mini-car sales don not go well
Imperative to strengthen development and production ability for mini cars
Toyota is keeping a lead in the total domestic sales of new cars (ordinary and mini cars). Nissan, Honda, Suzuki and Daihatsu are all closely competing with each other for the second place. The number of cars sold by each of these four companies is even less than a half of that of Toyota. The four companies, however, sell mini cars which Toyota does not have. The best selling new car in Japan is not the Toyota Corolla but the Suzuki Wagon R. Honda ranks third in the total car sales, but Suzuki, which vies for the top position in the mini-car sales, and Daihatsu are closely catching up with Honda. Nissan is maintaining the second place in the total car sales by increasing its mini-car sales.
While the total new car sales are declining, the car users switching over their cars from ordinary to mini vehicles are increasing in the number. One of every three cars sold is now a mini car. An effective way Honda to get close to Toyota in the sales race is to manufacture mini cars that sell well. In other word, it will not only lag further behind from Toyota but also drop out from the competing for the second place in the cars sales unless it develops and strengthens its ability to manufacture mini cars.
To promote its mini-car production, Honda raised at the end of 2006 its investment in Yachiyo Industry Co., Ltd., which manufactures mini cars for Honda by commission, to take it over as its subsidiary. Honda’s mini cars are produced at its Suzuka manufacturing plant in Mie Prefecture and by Yachiyo Industry. Yachiyo Inudustry, however, is in charge of making the most of different models of Honda mini cars. Honda is expected to appoint Motoatsu Shiraishi, its executive director and concurrently President of Honda R&D Co., Ltd., as President of Yachiyo Industry in June aiming at launching a full-scale reform of Honda’s development and manufacturing systems for mini cars.
A major significance lies on how soon Honda can complete the reform. As far as its production capacity is concerned, Yachiyo Industry is continuing its full operation, and it can not increase its production of mini cars any more under the present condition. Further more, it is impossible to conduct any major plant remodelling before a new plant for manufacturing of four-wheel cars, which is now being constructed in Yoriimachi in Saitama Prefecture for completion scheduled for 2010, starts operating. Until then, the mini-car sales by Nissan remains to be a threat to Honda.
Nissan gains supports from young women
Nissan does not have the development and production technology for mini cars of its own. This means the company can increase the models of mini cars to sell without much of laborious effort because it only sells cars bought from Suzuki and Mitsubishi under its own brand name. Even if Honda raises its mini-car production capacity, it might face difficulty in keeping its third place in mini-car sales race unless it succeeds in making of cars that can sell well.
Nissan has started dealing with mini cars because its clients began switching over their cars to mini cars sold by Suzuki, Daihatsu and other automakers. Nissan succeeded not only in keeping its clients by providing them with mini cars bought from other companies but also in luring new customers from other companies. It has the ability to make cars popular among its customers even though it has not developed those cars by itself. It enjoys supports especially from young women. While Honda is spending time for the reform of its development and production system for mini cars, its dealers fear that their customers who have long patronized Honda cars might be lured by not only Suzuki and Daihatsu but also by Nissan.