Soichiro Honda's saga qualifies for the rags-to-riches hall of fame. He had a dream and by literally building dreams, created the world's most successful motorcycling manufacturing venture. His story and the chapter assigned his largest distributor, American Honda, trigger memories of times when the American Dream contained more far-sighted substance and less short-term sizzle.
Honda Motor Company, Ltd. in Japan and American Honda Motor Company, Inc. have succeeded at blending eastern and western attitudes and behavior to build a unique success story that began 50 years ago in Japan and 11 years later in the United States.
Honda was already the world's largest motorcycle manufacturer when it tackled the American market in 1959. Within five years, American Honda became the largest motorcycle distributor in the world.
Soichiro Honda's success parallels the classic rags-to-riches fable - the lone individual starting in a humble setting, battling odds and succeeding, through talent, ingenuity, and good fortune. In a nation noted for reserve, Mr. Honda was and is often direct, frequently exuberant, sometimes hilarious, and always confident. He preferred getting his hands greasy in the shop to shuffling papers in the office. He chose learning on the job to academic paper chases. Yet when he found his technical knowledge deficient, he didn't hesitate to enroll in a technical high school - at age 29. The year was 1935. The motivation: learn why he was having problems manufacturing piston rings.
Before his venture into piston rings, Honda was employed as a technician. Automobiles, rather than motorcycles, were his first love. He dreamed of racing. After completing eight years of schooling he joined an auto repair shop at age 15. Two years later, he became a Harley owner and then an Indian rider.
He opened his own auto and motorcycle repair shop in 1928 while pursuing his hobby, building racing cars. That same year he applied for his first patent, for casting automobile wheel spokes. He organized Tokai Seiki Company, Ltd. to experiment with manufacturing piston rings. After initial failures, he sought further education which enabled him to successfully produce piston rings for automobiles, motorcycles and airplanes.
In 1945, Honda sold his stock to Toyota and took a year off. His sabbatical included music-making and merriment. Refreshed, he launched Honda Technical Research Laboratory in October of 1946. His new venture added war surplus Tohatsu and Mikuni generator motors to bicycles to provide basic transportation for the war-torn nation.
Recognizing the diminishing supply of surplus motors, Honda formed Honda Motor Company, Ltd. in Hamamatsu in 1948. The company's first headquarters was a 12 x 18 foot shed that housed 13 employees.
The "A" model motorized bicycle and the "B" model motorized tricycle bore the first Honda logos. The "C" model, Honda's first real motorcycle, soon became a performance and sales leader.
Takeo Fujisawa, referred to as a co-founder of the Honda empire, joined the company in 1949 as managing director. That same year saw the 100cc " D" model, the first chain-drive Honda. Its telescopic fork and two-speed transmission were both innovations rarely seen at the time.
Honda Motor Company initiated its climb to the forefront of four-stroke technology with the 150cc "E" model Dream which appeared in 1951. Sales success allowed Honda to focus vigorously on two key ingredients: quality and design.
Sales continued to boom, but the end of Korean War in 1953 triggered an economic depression in Japan that almost ruined Honda. The company survived, bolstered by the sale of Cub clip-on motors that were attached to bicycles.
Healthy again, his company produced the 90cc Benly as it developed the concept of high volume/low cost marketing combined with innovative design.
Honda manufactured their first scooter model, the Juno, in 1954.
Honda's first overhead cam engine, in the 250cc Dream, appeared in 1955. That same year, Honda became Japan's top motorcycle manufacturer.
By 1959 Honda was the largest motorcycle manufacturer in the world, producing 500,000 units a year. This success turned Honda's focus to another dream. The American Dream.
Honda Motor Company wanted to expand internationally. They figured there was a world-wide market for light, economical, fun-to-ride motorcycles. The surveys suggested Europe and Southeast Asia while downplaying the United States as a potential market. The reasons: annual sales of only 60,000 units and a negative motorcycling image.
Honda management eventually ignored the surveys. One reason: Honda's model line of 50cc to 300cc models would not compete directly with the large-displacement models preferred by the U.S. market. Mr. Fujisawa championed another reason: the world's consumer economy focused on the U.S. Acceptance in the American market would offer a base for world acceptance. Management's decision to enter the international market in America was accompanied by an official marketing philosophy statement: "Maintaining an international viewpoint, we are dedicated to supplying products of the highest efficiency, yet at a reasonable price for worldwide customer satisfaction."
Kihachiro Kawashima was selected as Executive Vice President and General Manager of American Honda Motor Company. Joined by seven employees, he opened shop in a small storefront office on Pico Boulevard in Los Angeles. its operating capital: $250,000. The date: June 4, 1959. The market sought: consumers wanting small, light, easy to handle and maintain two-wheeled vehicles.
American Honda's first model line included the C100 Super Cub, CB92 Benly Super Sport 125, CA95 Benly Touring 150, CA71 Dream Touring 250, CE71 Dream Sport 250, and C76 Dream Touring 300.
Initial response to Honda's import attempt was one of disbelief. Industry experts told the newcomers: "Honda motorcycles will never sell here."
One meeting between Mr. Kawashima and the head of a competitor summarizes the conflicting attitudes. The competitor asked Mr. Kawashima how many motorcycles he intended to sell here. The reply: About 12,000. The competitor responded: That's a pretty good number for a year ... about 1,000 a month. Mr. Kawashima corrected him: "Oh no, I'm talking about 12,000 a month."
American Honda personnel hit the road, seeking dealers. They met in hotels, in town halls, anywhere anyone would listen. Many established dealers weren't interested - and some did not offer the positive image American Honda sought. The new distributor focused on setting up dealerships in sporting goods stores, hobby shops, and hardware stores.
American Honda recorded its first sale in August of 1959. Instant success did not follow. The company faced numerous problems: overcoming a parts order backlog by developing a parts-picking system. Handling cash flow problems because of the consignment payment plan. Struggling to expand the dealer network. Fighting the inferior quality stigma that "Made in Japan" held at that time. Redesigning motorcycles made for Japan's slower, winding roads to handle America's higher speeds. Selling fuel economy in a nation that cared little for the concept. Coping with high staff turnover.
By year's end, American Honda had 15 dealers. For fiscal year 1959, they showed over $500,000 in gross income and a net loss of $54,000 from the sale of 1,732 units.
Back in Japan, Honda opened the world's largest motorcycle manufacturing plant in Suzuka. Here, American dealerships rose to 74 by the end of 1960.
Meanwhile, across the Atlantic, Honda was racing and eventually winning at the Isle of Man. At that time, an Isle of Man victory could generate more sales than winning a world championship.
Endurance performance on the continent helped bury the specter of alleged poor quality assigned to Japanese manufacturing in general. In 1962, three Honda 50cc motorcycles survived a week-long 24-hour-per-day Maudes Trophy endurance test in England, covering almost 16,000 miles. Honda received the first manufacturer's award in a decade and held the trophy for 11 years.
Hawks dominated the lineup by 1961. Honda introduced the CB72 250 Hawk, the CB77 305 Super Hawk, and the CL72 250 Scrambler.
These models, offering surprising performance for their displacement, helped escalate the dealership count to over 400 by year's end. Addressing American dealers in Japan, Mr. Honda presented a basic element of Honda philosophy: "Dealers must give their customers the very best service. Quality and service are like the two wheels of a motorcycle without one, the vehicle will fail. It's the same in enterprise. We, the manufacturers and dealers, have worked together to run our business positively based on the universal truths I have mentioned. This is the reason we have been able to draw away from our business rivals. You have the world's largest market, while Honda is the world's Number One motorcycle manufacturer. If we combine the biggest market and the excellent Honda products - like the two wheels of the motorcycle - then we can easily develop ourselves to the utmost business in the world."
Honda moved into truck and automobile sales in 1962. By then they controlled 65% of the Japanese motorcycle market. But America still presented a challenge - fighting the poor image of motorcycling in the U.S. The solution: renew efforts to replace that negative image with a new positive image that would allow creating a new motorcycle market.
The new image materialized - with an advertising campaign that would reshape the perception and marketing of motorcycles in the United States. This move would also establish Honda as the leader of industry direction. The concept: You meet the nicest people on a Honda.
The new image was presented in a new way - with general interest magazine advertising. The goal: acquaint the nation with Honda products, present motorcycles as socially-acceptable vehicles, and introduce the concept of motorcycling, Honda and fun in the minds of millions who never previously considered the subject.
The strategy worked, opening the door to motorcycling freedom for millions of Americans. Honda's small, affordable, easy-to-ride and easy-to-live-with machines provided transportation and excitement.
Several features made Honda's products attractive to the sport's newcomers and old-timers alike, eager for a product, even a lifestyle, previously not available. Compared to what was available at the time:
Hondas were clean. They didn't leak oil - or fling it, because fully enclosed drive chains were featured on many early models. Hondas were economical.
Hondas were durable and dependable. Control cables lasted years rather than weeks. Electrical systems didn't mysteriously quit.
Hondas were simple and easy to maintain.
Though Honda's new imports lacked the traditional "look" of the popular British motorcycles, their finish and performance sparked growing ranks of admirers. And the new styling began to grow on enthusiasts.
With many of the new Hondas, performance took on a new meaning, one not necessarily related to power alone. The small displacement step-throughs provided basic transportation for a young generation hungry for freedom. The trail models gave fisherman, hunters, campers and explorers an affordable and reliable means of backwoods/off-road transportation that provided fun and excitement as a bonus. As the model line increased, so did customer acceptance.