Trust Built Through Motorcycle Business Helped Honda as
a Late Entrant into the Automobile Market in Brazil
In 1996, after its motorcycle business had taken off, Honda reinvested the profit from the motorcycle business into the construction of an automobile factory in the city of Sumaré, the site Honda had originally acquired for a motorcycle plant. In the fall of the following year, the Sumaré Plant of Honda Automoveis do Brasil Ltda. (HAB), a Honda automobile production and sales subsidiary, was complete, and production started soon thereafter.
“The launch of the automobile plant was led by associates from the Manaus Plant. That is why, in Brazil, the connection between our motorcycle and automobile operations runs deep,” said Chihiro Morimoto, former vice president of HAB Sumaré Automobile Plant.
Unlike the case of the motorcycle production plant, many of the major U.S. and European automakers had already set up factories in Brazil, so Honda was truly a latecomer. However, here, too, Honda was helped by its experiences and achievements in its local motorcycle business. The trust Honda had built up over time through its motorcycle business also proved to be a key factor in automobile sales.
HAB began production of its first model, the Civic, with annual production volume of about 20,000 units. In 2002, HAB expanded its production capacity and added the second model, the Fit, in the following year. Both models won high local acclaim, and in 2006, Honda was ranked No.1 in CSI (customer satisfaction index) which effectively determined the “automaker of the year” in Brazil. The total sales of the two models reached 67,000 units, and Honda captured market share of 3.7% in 2006.
The Civic, the first model produced at Sumare’s automobile plant.
The Sumaré Plant has since expanded in size, and the automobile unit sales of HAB continued to grow at an accelerating pace. In the meantime, in 2019, production started at HAB’s second automobile plant in Itirapina, located about 100 km (60 miles) north of the Sumaré Plant, also in the state of São Paulo. Taking various initiatives including the consolidation of all automobile production to the Itirapina Plant and assigning a new role to Sumaré Plant mainly for powertrain production, HAB has been further strengthening Honda’s business foundations in the South American region.
Environmental and Safety Initiatives and
Contributions to Local Communities in Brazil
Safe Driving Promotion Activities
Honda Brazil has been promoting driving/riding safety in Brazil since 1972 in full cooperation with its dealers. In 1978, Honda opened a motorcycle training center adjacent to its local headquarters to train dealership staff as riding instructors. In 1998, Honda opened a massive 120km2 traffic safety education center in Indaiatuba, near São Paulo. Moreover, a Traffic Education Center for motorcycle riders opened in Recife in the northeastern region of Brazil in 2006, and also in Manaus in 2011. Honda has been providing traffic safety training programs for a broad range of professionals including not only Honda associates and dealership staff members, but also military and police forces and firefighters.
Factories by Brazilians for Brazilians
The Itirapina plant began producing complete automobiles from 2019.
Honda continued to do well in Brazil, setting all-time records for both production and sales in the mid-2000s. One reason for this, of course, was the high quality of its locally produced products.
“Quality is a matter of mindset,” said Tsurunishi. “If we simply imagine our customer using our vehicles, we would not neglect any small parts of our jobs. I believe that our tradition of building our products from the customer’s point of view has successfully been passed down from generation to generation at this plant.”
Another factor that made high quality possible was the high motivation of the Brazilian associates.
“People here value communication,” said Morimoto. “Even outside of work, co-workers and families often get together and enjoy fun activities such as barbecues and soccer. I think that because they have built relationships of trust through such activities, the sense of unity is strong and Honda spirit naturally permeates the workplace.”
“I think it’s important that we don’t just say, ‘Do this,’ but communicate clearly why it’s necessary to perform that task, based on our experience,” said Liborio dos Santos, a former director of production at had Manaus Motorcycle Plant. “Also, the voices of associates ‘at the spot’ need to be heard. It is important to listen to each person’s opinion. I believe that is the key role that management must play.”
“At Honda factories, everyone from the president of the company to production associates wears the same uniform and eats in the same cafeteria,” said Natsumeda. “Honda is the type of company that gives everyone a fair chance to succeed at our own job. So, I am not worried; I have full confidence in the future of this company.”
Although there are still some expats from Japan supporting production operations in Brazil, it is mostly the locally hired managers who lead the way for the associates. Honda operations in Brazil have succeeded in building factories by Brazilians for Brazilians.
Green Vehicles Unique Only to Brazil
Production and Sales of Flexible Fuel Vehicles
In 2006, Honda developed a new flexible fuel vehicle (FFV) system that operates on either 100 percent ethanol or a wide range of ethanol-gasoline fuel mixtures. As of 2023, all automobile models HAB produces and sells locally in Brazil feature FFV specifications.
Expanding Localized Business Activities
Throughout South America
HAR, Argentina's first motorcycle production plant.
Honda further expanded its business throughout the South American region by establishing motorcycle sales companies in Peru, Argentina and Venezuela in the 1970s and 1980s, an automobile sales company in Argentina, and a local subsidiary in Chile which handled sales of all Honda products including motorcycles, automobiles and power products, in the 1990s.
In 2000, the South American region, which until then had been under the umbrella of the Regional Operations (Americas) together with North and Central Americas, was spun off as the Regional Operations (South America) in order to further advance and strengthen the autonomy of the region, which was already been underway.
Honda established Honda South America Ltda. (HSA) in Brazil and launched a new operational structure with an aim to evolve Honda businesses tailored to individual economic zones, cultures, and markets across South America. In order to further accelerate its commitment to “building products close to the customer,” Honda expanded local production operations throughout the region.
In 2006, Honda Motor do Argentina S.A. (HAR) became the first company to begin local production of motorcycles in the country. That same year, the Honda Selva del Perú S.A. (HSP) motorcycle production subsidiary was established in Peru.
In 2007, HAR made the decision to produce automobiles as well. Although this project was delayed and forced to spend four years to construct the plant and prepare for production due to the impact of the 2008 global financial crisis, the Sumaré Automobile Plant in Brazil assisted HAR in starting up automobile production in Argentina.
In his remarks at the line-off ceremony that marked the start of HAR’s automobile production in 2011, Sho Minekawa,*3 then COO in charge of Regional Operations in South America, reaffirmed and shared his belief with associates: “We can realize our dreams if we can maintain our challenging spirit.”
“We had to overcome difficulties associated with the fact that this is a new plant with no previous experience, and all associates involved are new to automobile production,” said Minekawa, speaking at the line-off ceremony. “For HAB members who assisted HAR, this was the first experience with this kind of challenge. On top of that, we have faced many difficulties, including the market shrinkage after the global financial crisis, which delayed our project, and intensified competition in the market which forced us to make changes to our business structure. After overcoming all such obstacles, today, we managed to stand on the starting line of our challenge in manufacturing. I expect all of you to carry out your daily work with a sense of pride and purpose.”
- Sho Minekawa: Apr. 2007-Mar. 2011:
Chief Operating Officer of Honda Motor Co., in charge of Regional Operations (South America) concurrently served as: President and Director of Honda South America Ltda., President and Director of Moto Honda da Amazonia Ltda., President and Director of Honda Automoveis do Brasil Ltda.
HDA Manaus motorcycle plant
Studying People’s Daily Lives to Offer
the Best-Suited Products and Services to
Local Communities
Unique “Consórcio” Finance System (Brazil)
Taking an interest in a unique asset purchasing system in Brazil called consórcio, Honda established Consórcio Nacional Honda (CNH) in Brazil in 1981 to offer a greater number of customers an easy and safe means to purchase Honda products. Through this joint purchase system, in which multiple participants pool their funds each month to make purchases, and each participant receives their opportunity to purchase products in the order determined by a lottery, a total of approximately 6 million customers have purchased Honda motorcycles and automobiles as of 2021. Honda also introduced this system in Venezuela in 1997.
Environmental and Safety Initiatives and
Contributions to Local Communities in Brazil
Nature Conservation and Agricultural Projects
in an Area Adjacent to a Honda Test Course
More than half of the 1,000 hectares of land on which Honda’s test course was built near Manaus was left untouched in order to protect the natural forest. Moreover, an agricultural project was initiated on the remaining half of the land. In addition to planting and nurturing endangered plants, Honda is making effective use of harvested crops by supplying them to the cafeteria of the Honda plant and donating to local facilities which contribute to the well-being of local residents and communities.
Green Factory Featuring the Largest Wastewater
Treatment Plant in Region
In addition to the water purification facilities that were already in place when the Manaus Motorcycle Plant was built, a new wastewater treatment plant was constructed in 2001, making it the largest wastewater treatment facility in the Amazon region. Additionally, Honda has been proactive in promoting resource recycling from the waste generated in the production process.
Promoting Nature Conservation Activities
Since 2006, Honda has been conducting various initiatives to maintain a 16-hectare forest reserve (private natural heritage reserve) in Manaus, which is equivalent to the size of 17 soccer fields. By maintaining a balance between nature and the local ecosystem through the protection of water resources and the management of natural resources, approximately 140 species of trees and several species of native animals are currently being protected.
First Wind Power Generation Business
by an Auto Maker in Brazil
In 2013, Honda established Honda Energy do Brasil Ltda. (HEN), Honda’s wind power generation business subsidiary in Brazil, which began operation of a wind farm located in the city of Xangri-lá in Rio Grande do Sul, the southernmost state in Brazil in 2014. As of 2022, ten wind power turbine units are in operation and generating the entire amount of electricity needed annually to power Honda’s Sumaré Automobile Plant, Itirapina Automobile Plant, and offices in Morumbi in the state of São Paulo, using renewable energy source. Moreover, from the start of operation in 2014 until October 2022, the HEN wind farm has generated a total CO2 reduction effect of 43,000 tonnes (metric tons).
Going Further into the Future Together
with the South American Region
In 2021, Honda celebrated its 50th anniversary of local operations in Brazil. A year before that, in 2020, Honda’s cumulative automobile and motorcycle production in Brazil had reached the 2 million-unit and 25 million-unit milestones, respectively. A network of 1,300 dealership locations, which have been providing customers with after-sales service by technicians and mechanics assigned to each location, has enabled Honda models to be ranked No. 1 in virtually every customer satisfaction survey in Brazil. To date, all Honda associates in Brazil are making a daily effort while sharing the consciousness of working “for the customer.”
Honda’s South American business started in Brazil in 1971. In this often unstable and rapidly changing economic environment, there were times when many international companies pulled out of the market, and Honda was at a crossroads in deciding whether to stay in the market or step aside. Honda’s decision was to stay and tough it out. At the time, the company made a determination to “grow together with the region,” which became the guiding principle for Honda in South America.
Immediately upon his arrival, Sho Minekawa, who served as President and Director of HSA from 2007 to 2011, wrote in a company newsletter about the importance of taking root in the community: “We are not expanding our business to make short-term profits. We go into certain countries because there are customers waiting for us. I believe that the essence of management is to lead the company to overcome tough times. In this country, I feel that people recognize and appreciate Honda which stayed and persevered through difficult times.”
Issao Mizoguchi, who served as President and Director of HSA between 2014 and 2021, looked back on those tough times which he experienced firsthand. “The recession had a severe impact on our business environment, and every Honda business in Brazil struggled to cope with it, “he said. “In 1991, a research team was sent from Japan to verify the future prospect and growth potential of the Brazilian market. Naturally, there were so many uncertainties, and logically thinking, it was difficult to draw a conclusion that Honda should stay and continue its business here. However, in light of the fact that there were a large number of skilled local associates who had been producing Honda products since 1976, Honda management ultimately decided to stay and asked us to hang tough under the support of Honda in Japan.
In the second half of 1993, we were finally able to get back on track.”
Mizoguchi has been with Honda South America since he was hired locally by HDB when it was established in 1971. He remembers a word his Japanese boss often used during those tough times in the 1980s and 1990s. “‘Yaramaika!’ (‘Let’s do it!’ in English) was the phrase I often heard from my Japanese boss,” said Mizoguchi. “Perhaps not an uncommon term for Japanese associates, but we, local associates, had never heard anything like it. Whenever I was having a hard time making up my mind at work, or came up with some solutions but hesitated to implement them due to lack of confidence, my boss tole me, ‘Yaramaika!’ For me, it was more than just a word. It represented the spirit of taking actions, which was often the nudge of encouragement we all needed.”
Soichiro Honda visits HDB and encourages associates.
Atsushi Fujimoto*4, who assumed the position of President and Director of HSA in 2021, looked ahead to the future that he envisions to build on the 50-year history of Honda’s challenges in South America. “Honda business in South America exists today thanks to generations of our predecessors who established Honda plants and overcame a great deal of hardship Honda faced during their respective times,” he said. “Underlying the motivation of such hard work has always been our desire to make the daily lives of people in Brazil and the rest of South America more enjoyable as Honda grows. We want to carry this desire into the future. Honda would like to continue to be a company that sincerely engages with customers, offers products and services suited to each region, and works to make people’s daily lives more enjoyable and fulfilling.”
The clock never stops, changes are never-ending, and unexpected situations can arise at any time. However, Honda of South America, which is now firmly rooted in the region and has the ability to stay on its feet, will continue to stand with the community long into the future.
- Atsushi Fujimoto: Apr. 2021 – :
Operating Executive of Honda Motor Co., Ltd./ Chief Operating Officer in charge of Regional Operations (South America) concurrently served as: President and Director of Honda South America Ltda., President and Director of Moto Honda da Amazonia Ltda., President and Director of Honda Automoveis do Brasil Ltda.
Power Products for
the People of
South America
General-purpose Engines (Chile)
Salmon farming
Threshing and
cleaning quinoa
Honda engines are used extensively in Chile’s main industry of salmon farming as a power source for feeding machines and air compressors used by the divers performing underwater tasks. Honda generators also play an important role in providing electrical power, contributing to the mechanization of underwater works and ensuring safety and improving the efficiency of the people working in the industry.
Featuring the Honda GX160 engine as a power source, a machine for the threshing and cleaning of quinoa, one of the world’s most popular “superfoods,” was developed in 2019 as a joint project among Honda Motor de Chile (HMDC), Universidad Católica and several quinoa producer associations. HMDC conducted interviews with local quinoa farmers in order to identify their daily challenges and helped reduce their workload through the mechanization of manual labor tasks.
Longtail Boat Engines (Peru)
Longtail boats are the only means of transporting people and goods through the jungle areas along the Amazon River, and Honda’s reliable longtail boat engines have been a popular power source for these boats, which played an important role in distributing the COVID-19 vaccines into remote areas of the country.
Outboard Engines (Argentina)
Based on their proven durability and reliability, Honda outboard engines have been adopted by the municipality of San Fernando to power its emergency boats and provide support for the lives of river delta islanders.
Water Pumps (Brazil)
In the northern reaches of the country, water for domestic use is often pumped directly from the Amazon River to be stored in large water tanks perched on every home.
However, the distance to this water source can change drastically when the watershed changes significantly during the dry and rainy seasons. Honda Water pumps offer excellent performance, durability and portability, which makes them easy to carry and use for stable water transport throughout the year even over the long distances.
Environmental and Safety Initiatives and
Contributions to Local Communities in Brazil
Beach Cleanup Activities
In 2011, Honda held its first beach cleanup event in Brazil in the city of São Paulo, with the aim of creating a trend that would preserve the city’s sandy beaches for generations to come. Along with 45 participants from HSA, the Honda ATV*1 and towable Beach Cleaner*2 were there helping the cleanup activities. As a part of this event, HAS hosted a workshop for 120 students from local elementary schools.
- ATV: All-terrain vehicle
- Beach Cleaner: Towable beach cleaner developed by Honda equipped with a sand rake and other structure to collect litter and debris buried in the sand.
Supporting Countermeasures Against COVID-19
In 2020, Honda began supporting the joint efforts of the city of Manaus and universities to develop and repair ventilators for COVID-19 patients.
Food Donation Drives
Every year during the Christmas season, Honda associates in Manaus collect and repackage foodstuffs and donate them to people in need through local churches and other facilities.
