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Has Honda's run - run out?

nvbankernvbanker Posts: 7,285
edited March 20 in Honda
Honda reported a 37% drop in net income for last year, caused by an 8.2% drop in sales in the US. In Japan, Honda was unseated as the #2 automaker by Nissan, making Honda #3. Honda has been beseiged for the first real time in history, with a black mark for faulty transmissions in their Accord, forcing a recall in North America. The stronger yen against the Dollar has hurt earnings as well.

Honda has long been known for bullet proof cars, but refused to get into the truck and SUV market stubbornly bucking the trend in North America, and losing their prominence in sales. Have they waited to long to catch up now? Are they just now starting to realize the mistake, and gearing up to make a front wheel drive truck and some car based SUVs about the time the market is changing and going back to cars?

And lastly, their Chairman will step down in June.

Will they recover? OR is their long run of success over?


  • lemkolemko Posts: 15,120
    It wasn't long ago that Nissan almost bit the dust and look at them now. I'm sure Honda's situation, of which I wasn't even aware, isn't nearly as bad as that of Mitsubishi or Isuzu.
  • I think the Pilot is the largest SUV they'll make and we'll see the return of the Accord wagon. In the U.S. at least. I know it's available in other markets.
  • andre1969andre1969 Posts: 21,849
    this could be just a warning sign to Honda, and encourage them to not get too fat and lazy like GM did back in the 70's. Honda's still a long way from rock bottom, so they should have plenty of time to take corrective actions.
  • carguy58carguy58 Posts: 2,303
    Honda has lost ground because they totally messed up the exterior of the 03 Accord. The new Altima has really provided stiff competition for the Accord. The Accord is not in demand it was 5-10 years ago in terms of moving off of lots. I also think Mazda has alot to do with Honda's losing customers of late. Honda always got young people into the showroom now the young people like Mazda all of a sudden. The thing what I don't get is why Honda got into the horsepower Nissan but yet didn't style the Accord to at least cater to a sporty audience. As a Honda fan I didn't understand that decision at all. Honda sales are mostly down because Accord sales are down this year from last year. Acura sales are up. Well Acura is doing well. With Honda itself Honda needs to really sit down and re-evalaute Honda's brand direction in the US.

    Honda will not go into bankruptcy or something like that. They are very well run operation.

    As far as tranny problems are concerned every car company has had something similar to Honda's tranny problems. Honda won't be the last car company to make a foul-up like that.
  • I don't think it's so much a problem at Honda as the fact that other manufacturers are catching up. Honda has long been king of the "car as appliance" market. They know their customers well, and have been serving them well. However, some of the other companies are getting good at servicing this market as well.
  • andys120andys120 Loudon NHPosts: 16,593
    the incredible brand loyalty Honda's built up to run it's course. It's run by engineers, not marketing and financial types. Asd long as that's the case, my bet's on Honda Motor

    2000 BMW 528i, 2001 BMW 330CiC

  • carlisimocarlisimo Posts: 1,280
    Yeah, there's something special about Honda, but maybe that alienates too many mainstream buyers. Are most of their losses with the Accord? Should've kept it plain and boring I guess.

    Acura's going back up though, so it must sort of compensate...
  • robertsmxrobertsmx Posts: 5,525
    I have some numbers from Honda’s global sales/income for the fiscal year ending March 31, 2004.

    There was one area Honda’s global operations showed a decrease. I will use Honda’s statement on it…
    “Consolidated operating income decreased to JPY 600.1 billion (- 17.2%) primarily due to negative effects from currency effects of (JPY -101.0 billion ) and an increase in sales, and general and administrative expenses which offset the positive impact of increased revenues and cost reduction measures.”

    But here are the keys…

    Net Sales: Up (+2.4%) from 7,971.4 to 8,162.6 (in Billion Japanese Yen)
    Net Income: Up (+10.8%) from 439.43 to 486.91 (in Billion Japanese Yen)

    Did somebody mention a 37% drop in net income? Based on financial report from Honda, it went up 10.8%.
  • tomcat630tomcat630 Posts: 854
    Well, Honda's biggest worry is Hyundai. They can sell the same qulaity for less, and younger buyers aren't as loyal to Honda as "old hippies" are.
  • wale_bate1wale_bate1 Posts: 1,986
    Same quality?

    Look, I've never donned the saffron robes of the devout Hondaphile, but even I ain't buying that one.

    Same quality! Yeah, maybe to the vision-, hearing- and feeling-challenged!

    Pull the other one mate, s'got bells on!
  • alpha01alpha01 Posts: 4,747
    "Honda reported a 37% drop in net income for last year"

    Did you intentionally distort the facts because you wanted to start a new thread? Or did you make a genuine mistake?

    Heres the actual story, as quoted in todays Wall Street Journal, in an article by Ginny Parker, appearing on page A3 in the print version:

    "Honda Motor Co. hurt by slumping sales and rising costs in North America and the detrimental effects of a stronger yen against the dollar, reported a 37% drop in fiscal fourth-quarter net income."

    opertaive words: FISCAL FOURTH QUARTER (which is distinct from "last year", as you state).

    Honda is fine. This is just all normal course for business... crests and troughs... and with a fine budget for R&D... Im not worried.

  • nippononlynippononly SF Bay AreaPosts: 12,687
    while it is true that Honda fell to #3 by sales volume, they remain firmly in #2 position by net profits, and also by profits per vehicle. Which means Nissan is making some really slim margins on those magical marvelous Altimas. And their balance sheet is going to look really crappy about a year from now as bills start coming due for building the new truck plant, while the trucks being built there are selling 25-40% below the forecast volume.

    Having said all that, I was wondering something similar to the title of this thread just the other day. The Honda lots are not the busy little places they were a decade ago, and it seems they did not update the product quite enough with the last revisions of the Civic and Accord. Of course, with Civic they are already more than halfway to the next update. They need to take a bigger leap with the next one, in styling, engineering, and content.

    And the "trucks" are doing better - look at how much the Element exceeded their predicted sales figure. I believe it and CRV are still going strong, along with Odyssey, which is due for an update itself pretty soon. And Pilot only recently stopped being a waiting list proposition.

    I don't think Hondas are cars for old hippies, though, and I certainly don't think they are on a par with Hyundai - still a full step above, I would say. When competition stiffens, it is always tempting to imagine that the most profitable one will be the one that races to the bottom the quickest, and sells the cheapest product. But there will still be people willing to pay a small premium for a better product, and the premium for Hondas isn't THAT big.

    In the end, Honda's strength is that they are run by the engineers, not the beancounters. By playing to that strength, I think their long-term solidity is assured. But the beancounters may have had a hand in this whole problem with the automatic transmissions that have been causing problems all over the place. I think I would hesitate to recommend a used Honda automatic to a friend these days - too many problems have surfaced. Please, Honda, go back to letting the engineers call most of the shots!

    2013 Civic SI, 2009 Outback Sport 5-spd (stick)

  • nvbankernvbanker Posts: 7,285
    One little mistake........
  • grbeckgrbeck Posts: 2,361
    If Honda is worried about Hyundai, based on the Consumer Reports Survey and just-released J.D. Powers Initial Quality Survey, virtually all of the other car makers must be quaking in their boots.

    Hyundai outscored most other individual brands. If those surveys are taken as the gospel truth, that means Hyundai is selling BETTER quality for less than almost everyone else, and with a longer warranty to boot. So it's not just Honda that should be worried about a rapidly improving Hyundai.

    I agree with andys120 and nippononly - Honda's great strength is that it is run by engineers.

    It does, however, need to focus more on styling. Park a Civic next to a Mazda3, and there is no question as to which is the more vivid yet balanced design. There is no law that says a high-quality vehicle must also be plain.

    Plus, Honda lets its halo cars - the Acura NSX and Honda S2000 - stay on the market too long without changes. The Acura NSX needed a total revamp about five years ago, and the S2000 is starting to look old.
  • nippononlynippononly SF Bay AreaPosts: 12,687
    while the S2000 is still a fairly competitive car with its limited peers, the NSX is beginning to get dusted...

    the next RL and NSX need to be ALL THAT for the Acura division to stay on the roll it is currently enjoying with the TL and MDX. And with successive car generations rolling out every five years or so, Honda needs to be thinking RIGHT NOW what they are going to do long-term about the inherent limitations (traction, torque steer, vehicle balance) of the FWD layout they have stuck to through thick and thin. Will they commit to AWD, with the extra weight, complexity, and cost it brings? Or will they spend the even-greater money it may take to develop all-new RWD platforms for their cars and crossovers? Acura does not have to be the only division to benefit from this process - imagine how cool an all-new RWD Civic or Accord would be.

    I hope they do not choose instead to simply stick to FWD for most everything. Down that path lies an eventual eclipse of the Honda sun, I think...

    2013 Civic SI, 2009 Outback Sport 5-spd (stick)

  • robertsmxrobertsmx Posts: 5,525
    "Honda reported a 37% drop in net income for last year"

    Honda's net income was up 10.8% last year (not down).

    Operating income was down (Honda blames Yen-Dollar exchange rate for much of it) 17.2%.

    Net Sales was up 2.4%.
  • tomcat630tomcat630 Posts: 854
    Still, they aren't invincible, they just had a big transmission recall. They got some dropping sales of their key cars, like Civic and Accord. And the Element is really not getting the "young surfers".

    Hyundai did well in JD power this week, too. SO don't laugh off what's been posted.
  • saugataksaugatak Posts: 488
    worked hard to earn a terrible reputation when they first came to the States.

    I think (despite the jokes made by non-believers) that Hyundai has made vast improvements in quality in recent years, but it will still take time to shed the terrible reputation.

    Frankly, I think it's great that there's another quality carmaker intent on climbing the prestige ladder. To get up there, they'll have to continue building good cars and will have to offer them for a discount.

    nvbanker, sounds like in your job you have to pay the premium for a premium brand for image reasons. for those that don't have to worry about image, it's great that cheap (and now reliable) cars like Hyundai are around.
  • odmanodman Posts: 309
    Honda's got ton's of brand equity but if they don't get a model mix to market ASAP that reflects what people want, they will lose share and profits. Honda's last daring move was the Element. They are very slow to getting to market a minicar (the Fit) or a mini-minivan/cross-over wagon (the Stream/Latitude). Maybe they think there's more money in SUTs but I'm not sure. While good performing and good quality, their Civic is quite out of date, and is losing to more innovative/exciting models like the Mazda3.

    As for Hyundai, we know their initial quality is up, but I'll be convinced when I see them top the long-term durability survey (3+years). Cadillac also tops the short-term survey, but comes up weaker in longer-term Consumer Reports surveys. I don't doubt that Hyundai can get there, but most of us willl want to see their track record span out a few more years first. Honda rightly should be concerned about Hyundai, but so too should Toyota.
  • robertsmxrobertsmx Posts: 5,525
    "they aren't invincible"

    Nobody is. And nobody is suggesting they are. I pointed out the mistake in the original statement that "net income was down 37%". OTOH, it was UP 10.8%. See my point?

    That said, I don't put too much faith into "initial quality surveys". To a consumer, all that really matters is long term.
This discussion has been closed.