To a New Era Embodying The Power of Dreams
2001 Fit and Civic Hybrid
Into the 1990s, as more attention was paid to the global environment, Honda partially revised the Japanese wording of the Honda Company Principle in 1998, from “international viewpoint” to “global viewpoint.” In the same year, the company announced its Declaration of Voluntary Action for Recycling of Motorcycles and Automobiles in conjunction with the promulgation of the Law Concerning the Promotion of Measures to Cope with Global Warming. This was an initiative based on the “Honda Environmental Statement *17” established in 1992. Honda also launched the Green Dealer Project*18 among its nationwide automobile sales companies in Japan, and the environment became an important theme not only for its products but also for its sales operations. Against this backdrop, the first Honda hybrid vehicle, the Insight, was launched in 1999.
In December 2000, as the new century was about to begin, Honda announced its Global Brand Slogan, “The Power of Dreams.” As a mobility company, the slogan expressed the driving force of Honda in the 21st century. In the same year, Honda launched the Fit, an innovative compact car, and the Civic Hybrid, its second hybrid vehicle. In 2001, Honda achieved 863,121 units in domestic automobile sales, a record at the time.
- Basic policy on the environment, based on the Honda Fundamental Beliefs, clearly defining its position on the conservation of the environment
- In 2000, Honda launched the Green Dealer Certification system based on the environmental management system it had established, along with know-how gained through ISO 14001 certification.
Insight
The S2000 is Released
In 1999, the year after the 50th anniversary of Honda, the S2000, a rear-wheel drive two-seater open-top sports car, was launched.
Strengthening Automobile Sales in Japan
to Achieve Annual Sales of 1 Million Units
In 2002, Honda set a new annual automobile sales target of 1 million units in Japan. Honda implemented measures such as the Internavi Premium Club, a new interactive information network service, and established Honda Finance Co. to strengthen its sales financing services. Combined with the introduction of new products, Honda achieved sales of 902,658 units, even higher than the previous year’s volume. In the same year, Honda also launched a certification system*19 based on its own standards in the areas of the environment, safety, and accessibility, aiming to gain the trust of local communities at dealerships, the point of contact with customers.
In August 2004, the Honda Wako Building was completed on the site of the former Wako Factory. As a result, the head office functions that had been scattered throughout the Tokyo and Saitama areas were consolidated in the Aoyama Head Office and the Wako Building, further promoting collaboration among divisions, with the Wako Building assuming the functions of Regional Sales Operations(Japan).
In September 2005, an organizational restructuring was implemented to consolidate and unify most of the main operations handled by regional sales offices, including automobile sales, into the Regional Sales Operations(Japan) and sales companies in the Wako Building.
Around half of the associates of Regional Sales Operations(Japan) were transferred or dispatched to sales companies to strengthen the domestic automobile sales system (KSK policy).
The introduction of the e-Dealer system, which was completed at the end of 2004 for all sales companies, and other IT-based information networks improved operational efficiency and enabled the Regional Sales Operations(Japan) to communicate directly with dealerships without having to go through regional sales offices. Manabu Nishimae (then Deputy Operating Officer for Regional Sales Operations (Japan)) told the associates:
“With this organizational change, around half of Japan Sales will be moved, and I believe that some of you will experience unprecedented changes in your jobs. In the short term, this may cause hardships for our associates, but in the long term, I believe that this is a great opportunity for Honda to improve the health of our business and achieve sustainable growth. We will make every effort to create a system that will reward those who take on the challenges of new fields, and make them proud to work for Honda.”
- Orange Dealership system, Rainbow Dealership system
Wako Building
Environment, Safety and Accessibility Initiatives
In order for dealerships, the points of contact with customers, to be more trusted by local communities, Honda developed a certification system based on its own standards in the areas of the environment, safety, and accessibility.
Green dealerships (from 2000)
Green dealers aim to contribute to global environmental conservation by reducing waste generated at automobile sales and service sites and improving environmental efficiency through energy and resource conservation.
Rainbow dealerships (from 2002)
Rainbow dealers aim to contribute to realizing a society with fewer traffic accidents by providing a safe and comfortable car life through safe driving advice and holding safe driving seminars.
Orange dealerships (from 2002)
To ensure that the elderly and people with disabilities can visit the dealer with peace of mind, Orange dealers provide a barrier-free environment, and have welfare vehicles on display and available for test drives.
Launching Honda Cars with the Aim to Build a Stronger
Connection with Customers
Around 1985, when the three-channel system for domestic automobile sales began, increasing the number of sales channels tended to lead to sales expansion, as was the case with competitors. This trend changed dramatically after the burst of the bubble economy in Japan. Although each sales channel had contributed to sales expansion through friendly competition, it had become difficult to secure development resources to introduce exclusive models for each channel.
Honda began consolidating the three channels in March 2006 to create a sales network that was easy for customers to understand, handling all Honda-brand cars: Honda Cars was launched. While the Primo, Clio, and Verno channels had been differentiated by their image colors (red for Primo, blue for Clio, and green for Verno), Honda Cars switched to a new silver-based store design as a place where “advanced and familiarity meet.”
Image of Honda Cars dealership location (illustration)
In February 2007, at the first business meeting of Honda Cars, Satoshi Dobashi, then Chief Operating Officer for Regional Sales Operations(Japan), told the Honda Cars management team: “I must confess that the tone of my message at the last business meeting was rather harsh, and I think some dealers felt as if they were suddenly confronted with a major reform. I am sure that each of you took the opportunity of this first sales network reform in 20 years to look back on your own business activities as a Honda automobile dealer and to consider what direction to take in future management. I firmly believe that if both manufacturer and dealers follow through with the management direction they have decided on, it will surely lead to the maximization of lifetime customer satisfaction through the creation of customer joy, which in turn will enable us to build a strong sales network.”
Domestic automobile sales, however, were struggling in the wake of gasoline price hikes due to increasing crude oil prices. In 2008, the global economy was in turmoil due to the global financial crisis, forcing the automobile industry to cut back on production, and the sharp appreciation of the yen put Honda in a difficult position. In the midst of this, Honda was quick to develop environmentally responsible vehicles.
Following the FCX Clarity fuel cell vehicle, which was leased in 2008, Honda launched the Insight, “the hybrid vehicle for everyone,” which was more affordable for customers than the first-generation Insight, which had been developed as a Honda proposal for cutting-edge technology of that time.
Subsequently, from 2009 to 2010, approximately 280 associates from Honda offices and Honda group companies were temporarily transferred to consolidated sales subsidiaries to “establish a stable operational structure for the sales of 700,000 units per year” and to “strengthen the base revenue of consolidated sales subsidiaries.”
The measures, which aimed at protecting and increasing the number of customers, as well as strengthening the sales and product divisions, were successful, and with the significant boost from eco-car tax reductions and subsidies, Honda was able to become the second largest domestic automaker in 2009 for the first time in seven years.
In this year, Honda began offering its first financial service*20 and after-sales service*21 measures (later called “three Kizuna (bond)-building measures”).
At the Honda National Excellent Dealers Awards Convention held in 2010, Hiroshi Kobayashi, then Chief Operating Officer for the Regional Sales Operations(Japan), expressed his gratitude to the dealers. “In fiscal 2009, for the first time since the founding of Honda, we were able to achieve second place not only in total automobiles sold, but also in the registered vehicle category. This was the result of the efforts of our dealers, who worked hard to accumulate each and every vehicle, and to persevere to the very end, for which I am truly grateful. Creating bonds with customers is a job that only sales companies can do, and it is also an added value. I would like to ask for your continued cooperation.”
At the start of 2011, the seventh president of Honda, Takanobu Ito, made remarks to associates in Japan: “The year before last, I asked many of you at our business operations to take a temporary transfer and assignment at automobile dealership locations. I am fully aware that some of you are having a difficult time with adjusting to unfamiliar jobs, but this is an important company-wide measure that will determine the future of Honda, and I hope that all Honda associates share the same understanding and contribute to achieving domestic automobile sales of 700,000 units by delivering our vehicles to as many customers as possible.”
The efforts made by the sales companies and Honda business operations at that time became the foundation for the initiatives to build a Kizuna (bond) with the customers and three Kizuna-building measures which Honda continues to implement even to this date.
- Honda Finance-guaranteed residual value credit “Easy Insight Plan”
- Regular inspection package “Makase Ciao,” and “Honda Car Care Menu” providing various maintenance services
Hybrid Vehicle for Everyone
It was in the final stages of development that the hybrid vehicle codenamed “Global IMA” was named “Insight.” A completely new name was considered when developing the second-generation, but associates in Europe and the United States insisted on the Insight name. The grand concept of "NEXT ERA TRANSPORTATION" also shared the same essence as the origin of the Insight name (insight into the future) and was an appropriate name for a hybrid vehicle to be popularized worldwide. In February 2009, the second-generation Insight was launched at the price of 1.89 million yen, which was more affordable than previous hybrid vehicles. Ten years after the first-generation Insight went on sale, it became the “Hybrid for Everyone,” which went on to expand into the CR-Z, Fit, Fit Shuttle, and Freed.
Insight
Overcoming the Great East Japan Earthquake and Tsunami
to Continue the Pursuit of the Joys for Customers
In December 2011, Honda launched the N-BOX, the first model in the new N Series K-cars. Honda subsequently expanded its N Series lineup with the N-ONE, N-WGN, and N-VAN, establishing a firm position in the domestic automobile market, where downsizing was accelerating.
Nine months before the launch of the N-BOX, the Great East Japan Earthquake and tsunami hit Japan, which became a major turning point for Honda. On April 1, 2011, Hisashi Minekawa, then Chief Operating Officer for Regional Sales Operations (Japan), told his fellow associates: "This is such a big disaster, and we will not be able to take our next step unless we overcome this.” He added: “Our first priority is to bring back the Joy of Buying to our customers. Let's move forward without hesitation to realize Honda Philosophy, which is the foundation of Honda,” referring to “The Three Joys.” The Regional Sales Operations (Japan) focused its efforts on supporting the recovery of customers, suppliers, and dealers in the Tohoku and Kanto regions, which suffered tremendous damage. In addition, Honda supported the affected areas by releasing information on drivable roads*22 through its proprietary Internavi system.
In that year, the scarcity of electric power due to the earthquake and the disruption of parts supply routes forced a reduction in domestic production of automobiles, and sales dropped to approximately 500,000 units. Under these circumstances, in response to Tochigi R&D (HGT) experiencing extensive damage from the disaster, its R&D functions for K-cars were moved to Suzuka, where the K-car production line was located. By bringing SED members to the Suzuka Factory. Honda has able to start up SKI*23. This system became the force behind subsequent enhancement of the N series lineup.
“What Honda is trying to do has never changed. It is to manufacture products that fulfill the needs of our customers. Since the 2008 global financial crisis, the automobile market has quickly shifted to mini and small cars. In order to accommodate the needs of customers, our goal is not to be the same as the two leading companies in the K-car market, but to create a world of K-cars unique only to Honda, by fully demonstrating our technological and brand strengths,” said Minekawa.
- To help people in, and people on their way to support, the affected areas, Honda made drivable road data collected through Internavi available on Google’s Disaster Information site.
- SKI: Suzuka Kei (K-car) Innovation
N Series
N-BOX
N-ONE
N-WGN
N-VAN
Sincerely Responding to a Series of Recalls
with the “Three Reality Principle”
The strategy to concentrate resources on sales of small cars*24 was successful, and in 2012, Honda sold more than 740,000 automobiles in Japan for the first time since 2006. In March of the next year, cumulative domestic sales of the Fit series reached 2 million units, the fastest pace for Honda, and exceeded 760,000 automobile sales in Japan. As part of its growth strategy for Japan, Honda made a concerted effort to evolve its area strategy, sales activities, and customer management in line with its 2020 Vision*25, and the challenge to achieve domestic automobile sales of 1 million units, which was announced in 2014, was proceeding with a sense of urgency.
However, in December 2012, defect of Takata driver-side SRS airbags, which caused problems in North America, became a serious issue in Japan, resulting in a recall and causing significant inconvenience to customers. Furthermore, in 2013, repeated recalls of the Fit Hybrid and the Vezel Hybrid occurred. The newly developed hybrid system had defects, ,resulting in four recalls, an extremely serious situation.
In the midst of such difficulties, in 2014, in order to achieve optimal operations in Japan, Honda implemented organizational changes to regional supervisory functions and sales areas from the perspective of the autonomy of Japan business, and established Regional Operations (Japan), bringing together the Suzuka and Saitama factories, automobile manufacturing functions including purchasing and quality, and parts and service functions. Minekawa later recalled: “Since this was a matter that could affect the lives of our customers, we returned to the ‘Three Reality Principle’ and immediately took the lead in thoroughly resolving the problem.”
This was around the time that the consumption tax was increased from 5% to 8%. Although a series of problems continued to plague frontline sales, Honda developed Kizuna (bond) measures*26 to support customer car lifestyles and ensure that they could continue to drive their cars with peace of mind.
Minekawa, who had been in charge of Japan regional operations since he assumed the role shortly after the Great East Japan Earthquake, said at the time of his retirement in 2016: “The series of problems Honda experienced after the disaster damaged the “The Joy of Buying” for our customers, which we believe is the most important among the Three Joys. I fully accept my responsibility, but let me ask all Honda associates to help Honda to restore ‘The Joy of Buying’ for our customers.”
Mr. Takeo Fujisawa had explained the true meaning of The Three Joys: The “Joy of Selling” and “The Joy of Creating” are the reward Honda enjoys after ensuring “The Joy of Buying” for our customers.
- Collective name for mini- and compact vehicles
- “Creating products that ‘maximize the joy of our customers’ with speed, affordability, and low CO2 emissions”
- Honda introduced three measures to build a Kizuna (bond) with its customers: 1) residual value type auto loans, 2) auto insurance plan, 3) scheduled maintenance packages. Honda Total Care was added in December 2016.
Realizing “The Three Joys” in Japan, Birthplace of Honda
In 2017, Honda announced its 2030 Vision*27, communicating internally and externally that in an automotive industry undergoing a once-in-100-years transformation, the most important thing was to take a hard look at the starting point of Honda business. In order to respond to an era of dramatic change in customer values and the market environment, such as the shift to electrification, it was vital to clarify the roles of the sales companies and Honda, the manufacturer and to strengthen the establishment of a system to further deepen ties with customers. To this end, establishing a solid business foundation and improving support for the customer’s car lifestyles were urgent issues, and efforts were accelerated to strengthen services throughout the period of ownership and management focused on people.
In December 2016, Honda launched Honda Total Care, a car life support service including road services in partnership with the Japan Automobile Federation (JAF) and beginning with the fourth-generation Fit launched in February 2020, the Honda Total Care Premium connected service. In 2020, as COVID-19 spread worldwide, society and the economy were disrupted on a global scale. Shortages of parts, materials, and other items, such as semiconductors, and the stagnation of distribution networks led to an unprecedented crisis, forcing automakers around the world to cut production, and domestic automobile sales fell to 570,000 units that year. The severely prolonged delivery period placed a heavy burden on the sales front, but even under such circumstances, Honda developed various measures*28, including subscription services, to “further expand car-life support services tailored to each customer.” This was the challenge for Honda to create a bond with its customers.
It has been 60 years since Honda entered the automobile market the latest entrant among Japanese automobile manufactures. Honda has not followed in the footsteps of other companies, but has continued to carve its own unique path.
To date, Honda kept moving forward into uncharted territory amid unprecedented and significant changes in various societal and market environments, including changes in societal and international circumstances, technological advancements, and the occurrence of natural disasters. What has been the ultimate destination of Honda? What is the point of pride and anchorage of Honda? For Honda, placing its customers first and maximizing “The Joy of Buying” for the customers has always been the goal that the company must strive for with all its efforts.
Noriaki Abe who served as Chief Operating Officer for Regional Operations(Japan) until the FY2023, said: “Of course, what customers are looking for is not uniform, but Honda has the “Three Reality Principle”, which is the basic premise when dealing with the world, customers, and all other things. This means that we go to the real spot of production and sales operations, understand the real situation and real things and make realistic decisions based on the information we obtain by understanding the reality. We have forged ahead with our business with unwavering integrity, while consistently pursued ‘The Three Joys,’ which places the highest priority on “The Joy of Buying,” and the Three Reality Principle, as the most fundamental principles of our business.
“What does Honda need to do to continue offering customers The Joy of Buying” in the future?”
“What are the characteristics that make Honda unique?”
While continuing to ask these questions to itself, Honda will defy limits and common sense and tirelessly take on challenges and continue to move forward based on the Honda Philosophy.
- “Serve people worldwide with the joy of expanding their life’s potential.- Lead the advancement of mobility and enable people everywhere in the world to improve their daily lives –“
- Measures including 1) “EveryGo” Honda carsharing service; 2) “Raku-Raku Marugoto Plan” all-in-one monthly flat fee subscription (lease) plan for individual customers; 3) “Honda Monthly Owner” short-term subscription service for pre-owned vehicles; and 4) “SPIKA” service which enables Honda customers to send real-time feedback to their Honda dealers (see TOPICS below for details).
Enjoy Honda
The event started in 2001 at Twin Ring Motegi (currently, Mobility Resort Motegi) for the initial purpose to expand the motorsports fan base. The event was suspended in 2020 and 2021 due to the COVID-19 pandemic, but resumed in September 2022, continuously serving the purpose of enhancing the bond between customers and “All Honda” including Honda Cars dealerships.
SPIKA
A new survey method in which customers who visited Honda dealership locations for check-ups and mandated vehicle inspections are asked to answer questions online through a survey URL sent to their smartphones or social media accounts. Customer evaluations are fed back to the dealership in real time, enabling speedy improvements in customer service.
EveryGo car rental membership service
Raku-Raku Marugoto
(RakuMaru) Plan comprehensive
monthly all-in-one service for individuals
