Honda is a very popular brand in North America and Asia but could it be in Europe too? Two plants were established there, in the UK (1985) and Turkey (1996). Honda also had a successful partnership with MG Rover but Honda quickly removed itself from that arrangement when MGR owner BAe sold its majority share to BMW.  |
| The Honda sedan made in Turkey |
Honda has decided to end European manufacturing in 2021. Sales in Europe were just not good enough to justify making cars there. The chart above shows sales and market share in the six largest markets in Europe and Turkey for the first six months of 2021. Turkey was a strong market but it has import tariffs for the protection of locally made cars. That helped push its share there to 4.6%.
As for the rest of Europe, it was market forces that dictated volume. The UK's 1.4% share looked almost respectable compared with other major markets. In Germany, Honda registered a negligible 0.2%. Clearly, the cars were not resonating with the car buying public in the region.
In future, the focus will be on Asia and North America where the brand has strong acceptance. To show that in a dramatic way, there is a graph below that compares the USA and Europe market share percentage. It covers 2000 to 2021 (six months of 2021). The USA grew through to 10% in 2009 when it slipped back but then leveled off between 8-9%. Europe increased from about 1% to 2% by 2007, steadied and leveled off at about 1%. In the last few years it has dropped further to 0.5% in 2021.
I get the impression Honda felt car makers in Europe put too much emphasis on volume at the expense of profit. That is not a policy Honda subscribes to. Of course, closing a factory in Europe is met with howls of protest from politicians and workers alike. (The exception is the UK where it is greeted with muted disappointment). So keeping plants busy is the next best option but margins can become very thin in the process.
"Turkey was a strong market but it has import tariffs for the protection of locally made cars."
ReplyDeleteAre you sure? I had in mind, Turkey was in a customs union with the EU, which was the primary reason why car industry started to boom on the country (via Japanese manufacturers).
As I posted at another article, I had the impression that Honda went totally bonkers with prices. And selling no cars is never a viable strategy, given the crazy fixed costs such as product development.
I think Honda had the right strategy with Rover Back in the 90s, using synergies for Acura (something that BMW could not reproduce).
But following the loss of Rover, the European strategy was inconsistent, leading to losses in both EU and US markets (see the Acura TSX that flopped just as well as EU Accord).
Looking at models like the RL, and CSX, I am honestly surprised how the Acura brand survived the past 10 years...
There's a brief mention of import in Turkey duty here.
ReplyDeletehttps://tinyurl.com/5kdpfaww