After 50 years in U.S., Honda faces challenges
NEW YORK — In 1973, the local newspaper in Akron, Ohio, sent a photographer to Rick Case's filling station to take pictures of his signs bearing gas prices. The Middle East oil embargo was in full swing. Gas prices were around 30 cents a gallon and rising fast.
Case also owned the Honda dealership next-door. Before the photographer arrived, he changed the signs to read 99 cents — as high as the displays would go back then.
Case was on to something. A confluence of political and market forces gave Honda its big break in the U.S. in the '70s. Consumers who were suddenly worried about gas prices snapped up fuel-efficient small cars like the Civic that Case and a handful of other Honda dealers were selling. The Japanese automaker has found success by offering Americans affordable, reliable gas-sippers ever since.
"I was really hanging my hat on Honda, and I'm glad I did," said Case, who now owns several Honda and other dealerships in Ohio, Florida and Georgia. "The gas thing really helped get them attention."
But as Honda reached its 50th anniversary in the U.S. Thursday, new challenges confront the automaker. It will have to mount a stout defense of its turf as gas prices rise again, fuel-economy rules tighten and the market for small cars grows out of the wreckage of the Detroit Three.
"The industry is coming around to where Honda is, where (its) strengths are right now," said Jeff Schuster, executive director of vehicle forecasting for J.D. Power & Associates. "So they face a tougher competitive landscape."
Japanese engineer Soichiro Honda founded Honda Motor Co. in Tokyo just three years after World War II as a manufacturer of small motorcycles. The company established American Honda Motor Co. in 1959, signed up a handful of dealers and began importing small bikes like the Honda 50 to the U.S.
The company's first import car was the two-door N600, which sported a two-cylinder engine and a sticker price of $1,295.
Between 1973 and 1976, sales of the compact Civic more than quadrupled to 132,286, and they continued climbing for another three years. By the end of the decade, Honda had opened its first U.S. plant in Marysville, Ohio, and others sprung up across Ohio, Alabama and Mexico to build products from motorcycles to lawnmowers.
Meanwhile, a relentless focus on quality control "created a contrast with where American cars were going," said Fred Notehelfer, a professor specializing in modern Japanese history at the University of California at Los Angeles. American cars at the time, he said, "were often flashy but falling apart very quickly. ... Japanese cars, especially Hondas, would keep running."
Honda reaped the benefits of a second energy crisis last year, when an oil bubble pushed gas prices above $4 a gallon. Civic sales in the U.S. climbed to a record 339,289.
Honda's overall U.S. sales, however, declined 8 percent as the economy soured. The downturn accelerated and sales kept falling. The company has fought back by slashing production and offering buyouts and retirement packages.On Wednesday, Italian automaker Fiat Group sealed a deal to buy the bulk of Chrysler. The Auburn Hills, Mich., company is now poised to introduce new small cars to the U.S.Chrysler's crosstown rivals have small-car plans, too. General Motors plans to start building the subcompact Chevrolet Cruze next year.Meanwhile, Ford is bringing its popular subcompact Fiesta to the U.S. from Europe next year, and Toyota is working to bring a new car to the U.S. modeled after its iQ microcar.John Mendel, executive vice president for sales at American Honda, said the company already competes with small-car makers in Europe and plans to succeed in the U.S. by sticking to its strengths."We face those challenges globally now," he said. "That's not to diminish, certainly, the competition we see coming with a stronger, restructured GM or Chrysler or Ford."
