1.Entering the U.S. Market
Selecting the U.S. as the Starting Point for
Global Expansion:
In 1952, Soichiro Honda visited the U.S. for the first time with a team of staff to inspect and purchase machine tools. After he returned to Hamamatsu, he stood on a recycled wooden orange crate and told his fellow Honda associates: “In America, all kinds of things including refrigerators are being produced in large quantities and come off of the conveyor belt one after another. We don't have anything like that in Japan. So, our company needs to become able to make motorcycles like that. I will definitely make something like that in the future.”
Later, in 1954, as part of his declaration to compete in the Isle of Man TT Race, Mr. Honda insisted, “We must gauge the true worth of the Japanese machine industry, and raise it to a point where we can display it proudly to the entire world. The mission of our Honda Motor is to enlighten the world about the strength of Japanese industry.” Mr. Honda had also expressed the same passion in the company newsletter published in January 1954, “This year, we must increase our exports and showcase Japan’s industrial capability to the world.”
In fact, by this time, Honda had already begun exporting its products. After solidifying its foundation as the leading motorcycle manufacturer in Japan just a few years since its founding, in 1952, Honda had begun exporting the Cub F-Type to fulfill market demand in Taiwan. Then, Honda solidified its determination to seek full-fledged business expansion into markets outside Japan and conducted market research in Europe and Southeast Asia from the end of 1956 to the following year, and in the U.S. in 1958.
Based on their findings, the market research team members proposed to expand into Southeast Asia, where motorcycles and mopeds imported from Europe were gradually gaining popularity and the main means of mass transportation was in transition from bicycles to motorcycles. The team’s proposal was based on the forecast that motorcycles will be further popularized in the near future along with economic growth in this region.
However, Takeo Fujisawa, then Senior Managing Director, said: “Let's go to America.”
By the mid-1950s, the U.S. automobile market was already huge with production volume close to 10 million units*1, while industry-wide motorcycle sales were less than 60,000 units per year. Selecting the U.S. as Honda’s first entry point for the overseas market defied common sense at the time. However, Fujisawa insisted that the U.S. is the stronghold of capitalism and the center of the world economy, thus if Honda could succeed in the U.S., it could expect to further expand to global markets. He believed that if a product would not sell well in the U.S., it would never become an international product that would be well received around the world.
- Total for passenger cars, trucks, and buses.
American Honda Motor Co., Inc, Honda’s first base in the U.S. market
“We Create Our Own Markets”
Some people suggested that Honda should get help from a trading company for a smooth entry into the U.S. market. However, based on its experience in building a motorcycle sales network in Japan, Honda had some concern about relying on others to conduct its business. There might be some situations where the interest of the other party takes precedence over Honda’s, and if that happened, Honda could no longer conduct business the way it wanted. Moreover, motorcycles are consumer durables, so the manufacturer must take responsibility for providing after-sales service.
After giving due consideration to such factors, in June 1959, Honda established American Honda Motor Co., Inc. (AH), a wholly owned sales company in the U.S., and decided to build a sales network on its own. The basis of Honda’s activities is Honda’s corporate attitude of “light the torch and carry it with our own hands,” which means Honda blazes a path from scratch the way it believes is right.
After touring several candidate cities for the AHM office, the startup team members selected Los Angeles, where the climate is mild with very little rain throughout the year. This was an ideal environment for motorcycle business whose sales is largely impacted by the weather. Moreover, Los Angeles was home to a large Japanese-American population, and the team members thought that Japanese-American people who understood Japanese culture and language would be of help to the team in establishing Honda's first-ever subsidiary outside Japan.
In September 1959, AHM began its sales activities. The key products were the Dream (250 cc/300 cc) and the Benly (125 cc), and the Super Cub (“HONDA 50” in the U.S.), which had just been launched in Japan, was also added to the lineup.
Based on the belief that the company would have no chance to succeed and grow if it was not operated in a way appropriate to the local society, besides Kihachiro Kawashima and his subordinate who came from Japan, the locally-hired associates played key roles in the sales activities which started with a team of just eight members.
Under Kihachiro Kawashima, sales activities in the U.S. began with locally hired associates.
At that time, automobiles were the common means of transportation in the U.S., and motorcycles were the vehicles for a limited type of people such as outdoorsmen and racing enthusiasts. Large-size motorcycles with engine sizes of 500 cc or larger accounted for most of the motorcycle sales in the U.S. On top of that, motorcycles were associated with the image of outlaws wearing black leather jackets and were not well received in American society. The reality was that motorcycles were not being accepted as consumer products.
The motorcycle industry also had a negative image of being dark and dirty. It was not unusual for motorcycles to leak oil, and many motorcycle shops were dark and gloomy inside with floors covered with black oil stains. In other words, they did not have an inviting atmosphere that encouraged people to enter casually.
In such a market, it was not easy for Honda to sell a lineup of small-sized motorcycle models designed for practical use. Three months had passed since AHM began its sales activities, and by the end of 1959, the total number of motorcycles AHM sold was only about 170 units. It was so far short of the initial goal of 1,000 units per month. AHM’s initiatives for the cultivation of the U.S. motorcycle market were off to a rough start.
After a while, however, the Honda 50 began attracting people’s attention. The Honda 50 was a compact and easy-to-handle performance model which featured more than twice the horsepower compared to the other models in its class, while being quiet thanks to its four-stroke engine. In addition, its design with a front cover and wide footrests made it easy for women to ride because their skirts did not flutter while riding.
Gradually, the Honda 50 began giving many people the impression that it was a completely different kind of vehicle from the motorcycles that were associated with a negative image. Also, reasonable prices, which started at $215, enabled college students to buy one by saving their allowance or taking out a loan and enjoy it as a handy and fashionable means of transportation that added excitement to their college lives.
Honda 50 sales grew steadily; however, the AHM sales members started to feel that no further leaps and bounds could be expected while simply selling products through existing dealership locations.
Therefore, in order to promote motorcycles as consumer products, AHM decided to strengthen its sales strategy and carry out a massive advertising campaign, which was something that no other motorcycle manufacturer had done before. AHM associates toured around the country introducing AHM business and placed some advertisements to recruit a wide range of people who were enthusiastic about entering the motorcycle sales business. In addition, to make the purchase of a motorcycle much easier for more customers, AHM sales staff reached out to sporting goods and outdoors stores and proposed to them that they would sell the Honda 50 at their stores.
In addition, AHM decided to place product advertisements not only in motorcycle magazines but in popular general-interest magazines, as well. In particular, by placing advertisements in prestigious magazines, such as LIFE magazine, then one of the most influential photojournalism magazines in the U.S. at the time, Honda strived to improve the image of motorcycles in general.
HONDA 50 CA100 (Super Cub sold in the U.S.)
HONDA 50 CA100 in Action
Meanwhile, all AHM sales associates wore a suit and tie, and service mechanics wore an all-white work uniform. They always reminded themselves to serve customers with clean clothes and a courteous attitude, and emphasized the importance of doing so to the owners/management of dealers who sold Honda motorcycle products.
Furthermore, AHM created manuals and textbooks on sales activities and service techniques and held seminars throughout the U.S. to help Honda dealerships grow their business.
As a part of such efforts, AHM encouraged dealership owners to renovate their stores and asked for their cooperation in keeping their stores clean. By leveraging the fact that Honda motorcycle products would never leak even a single drop of oil, AHM and its dealers strived to dispel the bad image of motorcycle shops as oil-covered dingy places. Also, AHM generated a sense of friendly competition among its dealers by subsidizing a portion of the cost of advertising and publicity for dealers achieving outstanding sales.
These initiatives paid off, and Honda dealers began making voluntary efforts to increase their sales and improve the image of their stores. For example, many dealers proactively renovated their stores and created an atmosphere where anyone, including women and children, would come in more casually. Also, some dealers began advertising their stores and products on their own, and also contributed to volunteer activities in their local community by offering their products.
“If there is no demand, we will create it.” Based on this spirit that came from Mr. Fujisawa’s idea that “from nothing comes something”, AHM associates took on various challenges, overcame these challenges and created a motorcycle market. The U.S. gave Honda freedom to pursue this challenge. That was the great thing about America.
"Nicest People" Campaign Created a Great Sensation
“You Meet the Nicest People on a Honda” campaign poster
(Recreated based on original poster)
By December 1962, AHM's annual motorcycle sales exceeded 40,000 units, and the number of contracted dealers increased to nearly 750 locations, the largest among any motorcycle sales network in the U.S. For the following year, 1963, the annual sales target was set at 200,000 units, five times higher than the previous year's sales. AHM members believed the target was attainable if they could further enhance the reputation of motorcycle riders and further increase the presence of Honda products in the U.S..
To make that happen, AHM made a decision to launch a massive advertising campaign targeting the eleven western states with the catchphrase “You Meet the Nicest People on a Honda,” which was proposed by the advertising agency, Grey Advertising. This series of ads depicted all types of people, including housewives, parent-child combinations and young couples, riding the Honda 50 for various purposes including commuting to school, shopping, and leisure activities. The colorful illustrations and highly perfected design of these ads appealed to people who previously had no interest in motorcycles by strongly conveying the new value proposition of motorcycles as a convenient and fashionable vehicle people can enjoy in their everyday lives.
Eventually, mothers who used to turn a deaf ear to their teenagers’ plea for a motorcycle began saying, “I will buy you one if it’s a Honda.” The Honda 50 became a popular birthday and Christmas gift and gained popularity among a wider range of customers including students, businesspeople and stay-at-home parents. It finally came to be recognized as a new consumer product, something different from other existing motorcycle models.
Moreover, AHM again decided to pursue an advertising campaign no motorcycle manufacturer had done before.
Honda became the first international brand to run a TV commercial during the Academy Awards, a major cultural event that attracted the attention of the American people, whose live broadcast typically had viewership of more than 70-80%. In April 1964, the TV commercial aired throughout the U.S. generated a greater-than-expected response. It resulted not only in an overwhelming increase in the number of inquiries from people who wanted to open up new Honda dealership locations, but also a flood of requests for tie-ups from top-tier companies from all over the U.S., which wanted to use a Honda 50 as a prize in sales promotion campaigns for their respective products.
As the result of the AHM strategy and effort to convey the new value of motorcycles as a convenient vehicle people can enjoy in their everyday life, the Honda 50 successfully dispelled the “outlaw” image of motorcycles that had taken root in the U.S. and grew into a smash hit on a national scale.
“America Falls in Love”
In the January 1964 edition of the Honda company newsletter published in Japan a special story was featured titled “Honda from an overseas perspective.” In this story, Mr. William Grafton, “LIFE” magazine’s west coast regional manager at the time, who helped Honda pursue the nationwide advertising campaign, talked about Honda’s revolutionary success in the U.S. and offered his utmost praise for what Honda accomplished.
He wrote: “What Honda brought to America were more than just small, cute, clean and inexpensive vehicles. Honda offered a completely new way of living to tens of thousands of American families who had never before owned a motorcycle, or had never even thought about owning one. Those people who are currently using Honda were the people who, only about three to four years ago, denied the suggestion of using motorcycles with a contemptuous attitude, saying, ‘No way!’ But what about now? They can no longer let go of their motorcycles.
Wise American people know that for a fraction of the cost, they can have the pleasure of riding a Honda. [...] Yes. America is in love. And the name of the loved one is Honda.”
Addressing a Sales Slump and Contributing to Society
The CB750 FOUR, equipped with an inline 4-cylinder engine, gained popularity for its performance and product appeal.
In 1969, Canadian Honda (CH, later Honda Canada Inc.<HCI>) was established, and the Honda Dream CB750 Four, the first-ever, mass-market large-size motorcycle model equipped with an inline-four engine, went on sale in the U.S. and Canada. This model became so popular for its overwhelming performance and sophisticated product appeal that American and European motorcycles which had failed to adopt multi-cylinder engines were no longer considered the mainstream of motorcycles.
Honda motorcycles gained a solid foothold in America, and annual sales exceeded 500,000 units in 1970.
The product lineup was also well rounded, ranging from the 50 cc Honda Mini-Trail (the U.S. version of the Monkey) to 750 cc large-size models.
However, it was not all smooth sailing to get to that point. In 1965, the U.S. intensified its role in the Vietnam War. Many young American people, who were the core customers for the Honda 50, were sent to fight in Vietnam. As American society descended into a state of confusion and turmoil, starting around the spring of 1966, sales of AHM products including the Honda 50 began declining quickly, and AHM experienced an enduring sales slump.
Some Honda associates in America thought that the sales slump was due to what was happening in society. This was reported to Japan, with a request to Honda Motor for a big reduction in the shipment of bikes and caused great concern in Japan. Immediately, the vice president of AHM, Kihachiro Kawashima, flew to the U.S. to look into situation and, upon arrival, notified Mr. Fujisawa, vice president of HM, who happened to be in Bayreuth, Germany attended the annual Bayreuth Festival of Wagner opera music. Hearing of the problem, Fujisawa immediately left German for Los Angeles.
He went straight to the AHM office and gathered the Japanese staff and asked very detailed questions about the market situation. The next morning, AHM staff explained the situation again about the changing market situation, but Fujisawa disagreed.
“Isn’t the problem that our products are losing their appeal?” he said. “Do we have the same kind of attractiveness as the electric guitars the young people of today love so much? The bikes of Honda should have the same kind of appeal to young people.”
Based on this direction, AHM took various measures to stimulate market demand. Three conversion kits were created that spurred sales of Cub models, while product prices were lowered by significantly reducing advertising costs. Moreover, AHM urged the R&D Center in Japan to focus on the development of new models for the U.S. market.
As a result, AHM succeeded in creating new motorcycle markets. For example, in 1966, Honda launched the Honda Trail 90 (CT-90), a new model that fulfilled the needs of customers who had been riding a modified Honda 50 in search of a motorcycle they could take for a casual ride into the wilderness and mountain areas.
Another example of a new model launched during this era was the Honda Mini-Trail which went on sale in 1968 and became a smash hit as an off-road or recreational motorcycle even kids can ride for casual fun. It became a common sight in the U.S. that families with children enjoyed riding a Honda Mini-Trail as their weekend outdoor leisure activity.
Against this backdrop of the Mini-Trail’s popularity, the YMCA in the U.S. launched a program to facilitate the development of at risk youth by teaching them the safe and proper way of riding and various fun ways of using the Mini-Trail. This helped the teen participants to develop a positive attitude toward participation in group activities. AHM agreed with the purpose of the program and fulfilled YMCA’s request by donating 30 units of the Honda Mini-Trail. Moreover, Honda offered proactive support for the program including service parts and training sessions for YMCA mechanics. The total number of Honda Mini-Trails donated to the YMCA reached 10,000 units in 1970.
This Mini-Trail program, called the National Youth Program Using Minibikes (or NYPUM) attracted a large number of children including those who had never shown any prior interest in YMCA activities, and their enthusiastic participation in the program contributed to the prevention of juvenile delinquency. Thus, Honda’s support of the program was highly appreciate by the YMCA. The existence of the program and Honda’s contribution to it were covered by a large number of newspapers and magazines, and Honda received a lot of positive feedback. Ten years after its establishment, AHM had gradually begun undertaking activities that contributed to American society. [NOTE: the YMCA ended its association with NYPUM in the late 1990s. AHM continued the program with another organization until ending its support in 2022.]
The donation of the mini trail to the YMCA was American Honda Motor's contribution to the American society.
