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Has Honda's run - run out?
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?
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?
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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.
Company.
2001 BMW 330ci/E46, 2008 BMW 335i conv/E93
Acura's going back up though, so it must sort of compensate...
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%.
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!
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.
~alpha
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!
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
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.
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...
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
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%.
Hyundai did well in JD power this week, too. SO don't laugh off what's been posted.
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.
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.
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.
I think Hyundai's recent successes is one of the main reasons that Toyota went to the trouble of putting Scion together.
These little "sport wagons", or whatever cars like the Matrix and Mazda3 5-door are, seem to be really taking off. I am surprised Honda hasn't already gone to the trouble of bringing over their Stream for the U.S. market. I am sure they would sell like hotcakes. I agree with you, odman, the SUT is less of a sure thing. Subaru is about to kill the Baja, and I can't even think of any other unibody open-backed SUVs? The closest thing is Explorer SportCross, which also has not been a hot seller.
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
It wasn't that long ago that Nissan led Honda as the second largest manufacturer from Japan. It was only about 5 or 6 years ago that Honda overtook them in the sales race. That was mostly because Honda was "really hot" and Nissan was struggling. However, Nissan still had a much larger product line (ladder frame trucks for example) and a larger existing infrastructure. All Nissan really needed to do was dig itself out of the doldrums.
Hyundai quality has improved impressively. But that alone does not make them competition for Honda. Quality and reliability may be one of the hallmarks for Honda, but the company is also known for good ergonomics, high-tech engines, environmental friendliness, and now they are working on establishing themselves as safety innovators. Hyundai may be catching up in one category, but they have a long way to go before they match the total package.
As far as sales figures go, Honda is doing okay here in the US. They aren't setting the world on fire at the moment, but they aren't using the same incentives as everyone else. The home market is improving slowly with a few new models, and sales are up 17% in europe. Now that they have an in-house diesel for the european market, sales are expected to continue to climb. Accord sales are up 101% over last year, with the 2.2L CRD engine accounting for 37% of all Accord sales. That engine will soon be added to the already popular CR-V.
Honda can still fumble. They produced the Del Sol, the original Ody, and, while it was a fantastic performer, the Prelude missed it's mark on the showroom floor. They do make mistakes. But I don't see anything suggesting that they are currently in trouble.
There is a lot of competition out there and Honda needs to be vigilant and ever changing.
Honda is a very smart company. They don't just jump into things which can be good and bad.
I don't think Hyundai is our competition. They have come a long way but their reputation and dismal resale values will continue to hold them down, at least for the time being.
The transmission deal has been so overblown it's amazing. Still, I hope they have learned their lesson. Bad news tends to get amplified and spread quickly.
Honda, IMO, has been the prime automotive innovator in Japan; the only one with real engineering brilliance in motorsport until very recently, and that translates to product.
Hiccups are not trends.
After 4,569 lemon law/breach of warranty cases to date (since March 2001) in PA, NJ, DE, and NY, I've seen ONE Honda transmission failure and that was in an Odyssey, out of a total of 43 Honda cases in that same time - no Honda didn't step up in this Odyssey case, just like most other manufacturer's won't - they were sued, went to arb, and lost, owner got a new car.
I respect Honda for what its done on the market - I also respect Hyundai for improving as it has - I'm not ABOUT to get into the old Hyundai/Kia discussion again - the market and auctions speak for themselves - any arguing on any of our parts won't change that.
As far as Nissan, it has to be remembered that Nissan does a huge truck business while Honda does not. If you compare Altima and Sentra sales to Accord and Civics, it's a different story.
Also, Honda does not sell directly to the rental car business. This is another huge number of cars.
Over the years I have seen a decent amount of evidence that Honda autos are not that great for the long haul - a number of failures requiring replace/rebuild before the 100K mark. That may seem reasonable for some, but not for me.
So then you throw these largish recalls on top of that personal evidence, and it begins to make me a little leery myself. But their engines and manuals are the best bar none, IMO. Which is why I just bought one (a stick shift of course!).
isell: please share! What should we be staying tuned for? I love hearing about new Hondas coming down the pipe.
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
I've heard that only 2% of vehicles are affected, but that figure is BUNK because not all of the transmissions that will have premature failure have failed yet, so there is NO WAY that Honda can say that only 2% are affected...and if they really do know that only 2% are affected, then why don't they just recall the vehicles that make up that 2%? In order for Honda to come up with the 2% figure, they would also have to know exactly which cars are affected.
If I ever buy another Honda product again, I'll be sure to stay away from the automatics because they are junk and they always have been, and I tell everybody I know the same thing if they ask about Hondas. It's really a shame too, because their manuals are excellent.
Their initial quality has caught up to other companies' just this year, so it's the first crop of Korean cars that has a chance of equally good long-term reliability. I know quality and reliability don't go hand in hand, but I'm sure there's some correlation.
M
For years all people heard was that Honda does well in quality surverys. Now suddenly they don't matter? Reality is others have caught up, and even in long term surveys, other makes score well too.
But don't you think Honda has to start broadening its base of cars?
Their SUT concept for cool dads is basically nothing more than the Odyssey/Pilot/MDX with a cab and tray. Nobody who does any serious truck work will ever buy one and frankly, given the vicious competition in trucks and the strength of the domestic manufacturers in that area, I think Honda's going to have a tough time selling those SUTs (look at Nissan with the Titan).
Instead of broadening their line of cars (bigger trucks and SUVs, v8s, RWD) Honda looks like it's putting "green-tech" into their cars to get more power with better gas mileage, along with other technology like SH-AWD. We'll see if it works.
Re Honda's transmissions, they definitely took too long to fix it. Looks like they thought they could tweak what was a bad design. Only now that they have gone back to the drawing board and done a complete redesign does it look like the transmission troubles are fixed.
Saugatak - The Element is just a CR-V with a boxier body and different interior. It's doing quite well. So I wouldn't necessarily discount the SUT just because it's a variation on the Pilot.
And do you think Honda did bad this time by being on top? It still ended up being the best of the non-luxury brand bunch.
I never cared for initial quality surveys (if you look hardly enough in this board, you may find my posts along the lines dating back several years). To me, they are meaningless, and to top it off, the sample is just too small. For years, I noticed Chrysler sedans/coupes rated very high on JDP Initial Quality Surveys, and we all know how well those cars held up in the long term.
Honda and Toyota have a proven track record. Hyundai cannot claim the same. The company needs to prove it. And JDP IQS is not the way to do it. That said, sometimes cars are also about refinement, in terms of driving experience, and no Hyundai has managed to impress me yet. And that (refinement), to me, is a greater measure of quality.
Hyundai has yet to make anything I would want to rent, much less own, but they are vastly improved and are coming on. It's a horse the leaders have no choice but to watch because the crop is out and the jockey is using it, but IMO, they aren't near the front of the pack yet.
Chiming in with others: initial means precisely squat. Gimme the news three-five down the line, thank you!
As far as new product, well, we do have the new truck coming out...funny how some have dire predictions for this already, isn't it? Guess time will tell. Look for a hybrid Accord and a new Honda that is smaller and less expensive than the Civic.
Honda does keep news close to their vest and I guess that's a good thing. It's always better to sell what you have than to wait for what may be coming.
Hopefully, they have done their homework well...
And how do you *know* that? Have all of the defective transmissions failed already? If the exact percentage of defective transmissions is known, then why wasn't the problem fixed immediately and a recall issued that involved the cars affected? Why were there automatic transmission problems for mulitple years? Honda would have to know exactly which cars have defective transmissions in order for them to claim only a small % of cars are affected.
I'm not a Honda "hater". I've owned 2 of them and wouldn't hesitate to get another if Honda made an appealing vehicle for me again. I personally didn't have any major problems with my Hondas, because they had manual transmissions, so I'm not "shouting from the rooftop". I just wouldn't get an automatic Honda because I've heard plenty of bad news about them. The Honda mechanic that I used to bring my Hondas to even confirmed everything I've heard about the automatics, they are a very weak spot for Honda and they have been for a while. The issue is not a fluke, it's real.
But anyway, of course you don't agree with me. You have to sell the things everyday.
Mechanics are like doctors. They only see all of the sick people and cars with problems.
BTW, this has nothing to do with the fact I happen to sell them. I just hate it when things get blown out of proportion.
Just like the Toyota "sludge" situation.
"The transmission problems are isolated to a small percentage."
And how do you *know* that?"
"After 4,569 lemon law/breach of warranty cases to date (since March 2001) in PA, NJ, DE, and NY, I've seen ONE Honda transmission failure and that was in an Odyssey, out of a total of 43 Honda cases in that same time"
And there are a LOT of Accords and Odysseys in my neck of the woods. A LOT.
*The funny part about this story is my wife has a 2000 Focus sedan (of course we all here remember all the recalls and bad pub) and my wife's boss at her previous job is the one with the Accord sedan with the tranny failure. Anyway the boss was making snide comments about the Focus and how it basically was a piece of trash to my wife one day. Not two weeks later the tranny fails on her Accord. Talk about divine justice! I had to admit to taking some glee from someone else's suffering, but she deserved it ;-)
Unless you can say that every Honda automatic transmission failure (even out of warranty) results in a lemon law/breach of warranty case, then the above statement doesn't really tell us much about the failure rate.
Just kidding. It's Friday and I'm bored out of my skull, and there are no fun topics left in TH. Remember "Your Lawnmower Or Your SUV: Which Spends More Time Off-Road?"
Now those were the good ol' TH days. Bring back the goats, says I. Too damn serious around here.
I've owned three Hondas if you count the '87 Legend. Of the three, only the Legend ever had any tranny difficulty. Of course the neutral drop my then fiance inadvertantly performed might have had something to do with that one.
Honda's not going anywhere. Everyone's got problems to fix and that a fact. Honda's worst problem right now, IMO, is a styling one. They seem to be embracing most necessary trends philosophically otherwise.