IT STARTED WITH A DREAM...
Pioneers and mavericks. America loves them. Our folk history thrives on individuals who followed their own vision, who marched to their own drummer, who did it their way. The classic rags-to-riches success story. The American Dream.
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 40 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:
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.
By 1963, imports were up to 150,000 motorcycles as American Honda moved to its current headquarters in Gardena, California. In four years, the original staff of eight had grown to 150.
The following year, American Honda decided to spend half its annual advertising budget in one day. One night really, the 1964 Academy Awards telecast. Two 90-second commercials cost $350,000 -- and triggered millions in sales -- as well as national recognition. As its dealers' showrooms handled the jump in traffic, America Honda fielded requests from Coca-Cola, DuPont, RCA, Pepsi-Cola, Westinghouse, and others for promotional tie-ins.
Following through on its commitment to motorcycling in America, American Honda acted as the catalyst in the formation of the Motorcycle Industry Council. American Honda also initiated formation of the Motorcycle Safety Council, providing 50% of the funding. Further safety efforts included working with many state motor vehicle Departments and distribution of the safety promotion film, The Invisible Circle.
Expanding community involvement included donating motorcycles for youth education purposes. A juvenile delinquency-prevention program with the YMCA, initiated in Southern California, escalated into the National Youth Program Using Mini-Bikes (NYPUM) that provided mini-bikes for youths. Overall, American Honda has donated over 15,000 mini-bikes as well as thousands of other motorcycles for rider education. In 1988 the company opened a Rider Education Center in Colton, California, the first of its kind. Additional centers will follow.
By the end of 1964, as a result of its leadership in image direction, marketing and education, American Honda had 62% of the U.S. market, just five years after opening its doors.
The first "big" Honda, the CB450, appeared in 1965.
New product development continued, stimulated by expanded international racing. Honda's involvement in auto racing produced a win in the Mexican Grand Prix in 1965. A year later, in Motorcycle Grand Prix road racing, Honda established an industry first -- sweeping all five manufacturers' solo road racing world titles. That race-developed technology, in automobiles and motorcycles, would soon appear in consumer products.
But first, American Honda faced a sizable economic hurdle, its first since the early days. A year long slump saw sales drop from 20,000 to 13,000 units per month. The company decided to update its models. Shipments were suspended and inventory was restyled as the factory developed new product. This response saw sales return in the spring of 1968 -- the same year Honda commemorated the cumulative sale of 10 million units world-wide.
Sales were further stimulated by the 1968 introduction of the Z50A MiniTrail 50. This model, which still lives today as the Z50R, introduced more youngsters to motorcycling than any other single model ever manufactured. Z50 model sales in excess of 450,000 units rank it as American Honda's all-time best-selling model.
Another long-time favorite, the CB350, appeared in 1968, taking the place of the 305 models.
In 1969, American Honda introduced two more all-time top-selling models. For many, the appearance of the CB750 Four signifies the emergence of the modern motorcycle era. The Four boasted a front disc brake and a 67 horsepower engine. The SOHC model went on to sell more than 400,000 units, making it the second best seller to date. CT70 Trail 70 sales of more than 380,000 units rank it third on the all-time list. The SL350 Motosport also debuted in 1969.
That same year, as American Honda celebrated its tenth anniversary, it added its first automotive import -- the N600 Sedan.
Again, just as ten years earlier, initial resistance met American Honda's efforts to develop a dealer base. The persistent argument: what's a motorcycle builder know about making automobiles.
Honda's cumulative motorcycle exports reached five million in 1970. Here, American Honda imported the industry's first three-wheeler, the ATC90 All Terrain Cycle. Other new models included the CB 100 Super Sport 100, CL100 Scrambler 100, SL100 Motosport 100 and SL175 Motosport 175.
A 750 Honda motorcycle won the 1970 Daytona 200, but the auto venture proceeded slowly. By year's end, 58 dealers had generated less than 6,000 sales.
Another four-cylinder motorcycle appeared in 1971, the CB500. The CB35OF followed in 1972 as automobile figures climbed to 200 dealerships and 20,000 units sold. The first XL, the XL250, appeared in 1972.
Expanding it's commitment to the American market, Honda formed Honda International Trading (HIT) in 1972. This company exports American products to Japan.
Both Mr. Honda and Mr. Fujisawa retired in 1973, 25 years after formation of the Honda Motor Company. Mr. Kiyoshi Kawashima was named the new president of Honda Motor Company.
That same year saw the introduction of several significant model concepts: the XR75 off-road mini, the ATC70 mini, and Honda's first two-stroke in 20 years, the CR250M Elsinore motocrosser. Motorcycle sales peaked at an all-time high of 700,000 units in 1973.
Honda adopted an official model year policy with the introduction of the 1974 line. Four more XLs appeared, along with the CB200 and three additional two-strokes, the CR125 and MT125 and MT250 dual-purpose models.
The automobile effort, spurred by the fuel crisis, found the American public willing to consider an economy car (the new Civic) that offered 40 mpg while drawing rave reviews from the magazines.
Honda became the first automobile-maker to comply with the U.S. Clean Air Act of 1975. The revolutionary CVCC engine attracted much media attention. When challenged by scoffers, Honda proved the CVCC would pass the EPA test on Detroit eight-cylinder engines as well.
Honda's first liquid-cooled, shaft-drive, the GL1000 Gold Wing, appeared in 1975, along with their first off-road-only enduro model, the MR175. American Honda added a new division, Power Products, while the Automobile Division saw the Civic top the EPA Mileage Charts for the second straight year.
The Accord automobile followed in 1976, the same year that American Honda released its first automatic transmission motorcycle, the CB750A.
A new kind of four-wheeler, the FL250 Odyssey, appeared in 1977. The year also saw American Honda's first "moped," the NC50 Express.
On October 11th, 1977 Honda publicly signaled its increasing commitment to American enterprise and community involvement. The company became the first Japanese motorcycle manufacturer to move a portion of the process to the United States. A new corporation, Honda of America Manufacturing, would assemble and manufacture products in America at a facility to be built in Marysville, Ohio.
Six months later, on April 3, 1978, ground was broken for a 220,000 square foot facility costing about $35 million. It's capacity: 60,000 units per year. The plant became operational in September of the following year.
New products for 1978 included the first Honda two-stroke moped (PA50), the first CR25OR works-type motocross model, the first motorcycle counterbalancer and three-valve head (in the CB400T), the first V-twin motorcycle, the CX500, and the first hi-tech dual-purpose machine, the XL250S, which featured a 23-inch front wheel and dual exhaust pipes.
The superbike of superbikes, the in-line six CBX Super Sport, appeared in 1979 along with a double overhead cam CB750. The new line also included the first full-sized four-stroke enduros, the XR185, XR250 and XR500, and Honda's first custom model, the CX500C Custom. On the automotive side, the Prelude joined the lineup.
A larger GLl100 Gold Wing headed the 1980 model list. The Interstate was the industry's first full dress touring bike. Adding to its list of firsts, Honda announced the first American automobile manufacturing plant in America by a Japanese builder. The project, budgeted at $250 million, generated a million square foot factory to build Accords.
The Ohio manufacturing plants demonstrated Honda's commitment to America while serving as a model for blending eastern and western business philosophies. The Honda management style emphasizes recognition of all employees as "associates" while stressing teamwork rather than a potentially tense management vs. labor coexistence.
Speaking of the build-in-America venture, Mr. Kawashima said, "The most important thing is maintaining the quality that the American buyer has come to associate with Honda products, which I am confident we can do."
The first Pro-Link, liquid-cooled motocrossers appeared in 1981. The XR models also featured the Pro-Link suspension.
In 1981, Team Honda gave America a first in world team motocross. The Honda Race Team swept both the Motocross and Trophee des Nations events. Team Honda repeated the sweep the following year, initiating a victory string that remains unbroken to date by multiple-manufacturer teams that have included Honda MX star Rick Johnson.
Two industry firsts appeared in the 1982 model line. The first modern V-Four engines appeared in the VF750S Sabre and VF750C Magna. The first production use of turbocharging with fuel injection specifically designed for a twin-cylinder motorcycle appeared in the CX500 Turbo.
Tetsuo Chino became the new president of American Honda in 1983. The same year, Mr. Honda, speaking at American Honda, said, "I want all employees and their families to be happy working for or being associated with Honda. I want American Honda to prosper, so that everyone working at American Honda will prosper as well, and be happy."
Honda expanded its ATV line in 1984 to include the four-wheeled TRX200. Other new models included the Gyro, Spree, and Elite scooters and the CB700SC Nighthawk. Gold Wing displacement was also boosted to 1200cc.
Expanding its American manufacturing commitment, Honda established Honda Power Equipment Manufacturing, Inc., based in North Carolina.
On the automotive side, Honda became the first manufacturer to finish first, second and third in the Motor Trend Import Cars of the Year selections. The Civic S Hatchback, Prelude, and Civic CRX garnered the honors.
American Honda celebrated its 25th anniversary in 1984 by generating record annual sales of 776,000 motorcycles, motor scooters and ATVs. The year also saw the sale of 400,000 automobiles and 250,000 power equipment units. Ohio manufacturing figures climbed to 150,000 automobiles and 70,000 motorcycles.
The following year's model line included the CMX250 Rebel, Big Red (ATC250ES), the tenth anniversary GLl200 LTD, the VF1000R, and the FL35OR Odyssey.
The first four-wheel drive Fourtrax, the TRX350 appeared in 1986, along with the VFR75OF Interceptor and the CN250 Helix.
Hurricanes headlined the 1987 model year. Both the 600 and 1 000 models received top ratings from the press and the public.
Yoshihide Munekuni became American Honda's president in 1988. Honda's first flat six, and largest displacement motorcycle to date, the GL1500 Gold Wing, was included in the 1988 model selection that also featured the NT650 Hawk GT and three NX models to replace XL dual-sports motorcycles.
Today, 29 years and more than 750 models after opening its doors on Pico Boulevard in Los Angeles, American Honda has adopted a new marketing message. The original invitation asked Americans to meet the nicest people on a Honda. Subsequent messages declared "going strong" and "follow the leader." Now, looking at the '90s, American Honda's new message quietly understates the company's continuing position as industry leader while simultaneously signaling a new direction. It's an invitation to a new generation of enthusiasts to discover, to share the fun, to: "Come ride with us."
Despite the industry's cyclical sales swings, the pendulum swings back and forth, one constant is likely to remain. The Honda position of leadership -- reflected by a published statement of commitment to customer satisfaction, pioneering technology, community involvement and corporate success shared with associates.
It's all part of what is known as the Honda Way -- the guidelines which serve as a day-to-day working philosophy of thousands of American Honda employees and dealership personnel across the nation.