Honda: Head of the class

In an industry that, historically, has preferred the head-in-the-sand approach to all matters evolutionary, "Honda has long behaved as if the world is indeed running out of all kinds of resources, including oil," says Alex Taylor in Fortune magazine.

The Japanese carmaker's "relentless focus on thrift and conservation, which seemed like eccentricities 20 or 30 years ago, today make Honda the leader of the environmental pack."

And at a time when the world is hyper-conscious about gas prices, that kind of prescience is paying off for Honda in a big way, says Taylor.

While the Detroit Three – as well as Toyota, who appears to have missed the memo that big cars just aren't selling like they used to and recently opened a pick-up truck plant in North America – saw May sales slump by between 4.3 per cent for Toyota to 27.5 per cent for General Motors, Honda posted a stunning 15.6 per cent sales increase.
And just to drive it all home, Honda Civic became the best selling vehicle in America – car or truck – outselling the once-invincible Ford F-150 pick-up trucks, says Taylor.

But this isn't rocket science, says Taylor. So why didn't other manufacturers see the road ahead? And what separates Honda from the pack?

Basically, the other automakers got sidetracked by the easy profits available in big SUVs and pick-ups, says Taylor. The 1990s combination of cheap gas and high-profit big vehicles had automakers thinking the good times would never end.

But when the party started to die down, US domestics were too hooked on the big money, and too inflexible, to adapt. Toyota and Nissan got sucked in too, "ramping up pick-up production at just the wrong time."

They also became distracted by their own corporate imperatives, says Taylor. The Detroit Three went through a phase of reviving models from 40 years ago – Mustang, Challenger, Camaro – favouring the short term jolt these got in the marketplace over any kind of long-term strategy for a resource-constrained world.

"And who can explain GM's infatuation with Hummers long after the brand ceased to resonate in the marketplace?" asks Taylor.

Meanwhile, Honda's tightly-knit corporate culture and long horizons allowed it to wait for trends to move in its direction, rather than chasing fluctuations in the marketplace.

So, says Taylor, "don't be surprised to see Honda edge ahead of Ford into third place in the US market (behind GM and Toyota). It won't happen because of any strenuous sales efforts - it will be another case of the world coming to Honda, rather than the other way around."

High tide at Honda, Alex Taylor, Fortune