11 February 2011

Honda Retreats On The Sales Front


Honda was the fifth largest car maker in the world in 2009. However, the company is clearly moving away from volume. Honda made 3.9 million cars in 2008, and 3.0 million in 2010, by my reckoning, a drop from 5.9 to 4.5% world share. I haven't got 2010 figures yet, but 2011 may see a big slide.
In Korea, Honda was the leading import brand for 2008, in January '11 it was 7th! A sampling of figures reveals Honda is cutting back in many countries. For example, comparing market share in a recent year to Jan 2011:

Austria 2007 1.5% - Jan '11 0.4%
Holland 2009 2.7% - 0.8%
Russia 2008 3.1% - 0.4%
Turkey 2008 6.8% - 1.7%
Croatia 2009 2.4% - 0.6%
Canada 2008 9.3% - 4.1%

You can see clearly from those statistics, a massive drop in market share in a short period of time.
Honda reported its last quarter profits were well down. I presume it is focusing more on making money on what it sells rather than simply moving metal. This is a bold decision as falling sales, especially as dramatic as this, is never a good look. We notice how many cars a brand sells, rather than the bottom line profitability. Of course, there are economies of sales with volume, but there is also a point where selling a car isn't worth it if you don't make any money out of it.
Honda is a very private company and does not seek alliances with other makers, something which is different to the direction all the competition is taking. Can Honda remain so independent? Time will tell.

What it means to me: Honda make a well-engineered, sensible range of cars. Presumably they hope that reputation will sell cars for them, rather than sharp pricing.

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