Localizing the Business in Thailand Where Honda Takes
Its First Steps into Asia

Honda took its first major step into the Asian motorcycle business in 1964. The company established Asian Honda Motor (ASH), its first Asian sales outlet for motorcycles and power products, in Bangkok, Thailand. The following year, Honda established Thai Honda Manufacturing (TH) as a motorcycle production operation, and local production soon began.
In expanding overseas, it’s necessary to develop business in accordance with each country’s policies. In Asia, Honda produced products which already had been produced in Japan, and depending on the conditions of each country, knockdown production was the norm, where Japanese-made parts were assembled at local factories with little or no local procurement.
Local production required appropriate steps, and the cooperation of various suppliers. Over the years, Honda made steady progress in localizing its production operations, including the establishment of joint ventures with multiple suppliers and increasing the in-house production of parts at local plants through the licensing of technology.
During the process of localizing Honda business in Thailand, many Japanese and joint venture companies were established locally, including equipment and parts makers and logistics companies. As a result, Honda even started exporting parts and motorcycles, which were then used by European and U.S. motorcycle manufacturers to produce their products for other emerging countries. In 2019, Honda was Thailand’s top exporter of motorcycles with 630,000 units, of which 230,000 were finished motorcycles. This success was achieved due to the Honda strategy to achieve local content as high as 97% and to export its motorcycles globally from Thailand ahead of other motorcycle manufacturers.

Developing the Nova-S Based on Thorough Understanding
of Local Needs

Launched in 1987, the Nova-S was an essential example of localization in Thailand. Although Honda was one of the first to engage in local production and sales, its share of the Thai motorcycle market remained in third place through the 1980s. At the time, Honda was competing in advanced countries based on its technological strengths. However, in Thailand and other countries where small motorcycles and scooters were literally a way of life, this product-oriented thinking clearly didn’t work. If Honda didn’t thoroughly understand the lifestyles and thinking of local customers, and manufacture products that were truly needed in the region, people would surely turn away. Based on the lessons learned up to this point, Honda began to develop products with specifications that incorporated more local sensibilities and needs.
The results of market surveys indicated that the reason for the struggle Honda faced in Thailand was its brand image which was associated more with older generations, and people said that Honda was unable to sell or develop motorcycles for young people. In other words, Honda was not a dream-inspiring brand, and that was the reason why Honda business wasn’t growing. To address this issue, Honda urgently needed to create a more dream-inspiring and youthful image. In light of the survey results Honda received in 1986, the company conducted surveys of young people throughout Thailand in order to better understand their lifestyles, fashion preferences and interest in motorcycles.
In January 1987, a development team was formed and the decision was made to introduce a new 2-stroke family sports model. However, it needed to be developed in less than half the usual time. In fact, it was even said that the success or failure of this model would determine the fate of Honda in Thailand. So, development proceeded at a rapid pace under extraordinary pressure. Special attention was paid to engine development, as an earlier introduction of a 2-stroke model in Thailand had resulted in a rash of engine seizures, which seriously damaged the reputation of Honda. Normally, no more than 60 prototype cylinders are manufactured, but for this project a whopping 300 were prepared. Also, in preparation for the rainy season, the development team conducted numerous tests, including one in which the engine was suddenly cooled by running the prototypes through a large puddle of water on a flooded road. Instead of the horizontally oriented engine of the Super Cub^*1, the team designed an engine with a 40-degree forward tilt, making the cylinder as close to vertical as possible, which was more akin to the look of a sports bike. Additionally, the team considered the importance of the ease of getting on and off the bike for female users, so it made special efforts to create a uniquely-shaped frame and other unique design features. Finally, in December 1987, the Nova-S was launched.
Prior to the market launch of the Nova-S, Honda also centralized its sales network and established a new local sales company named A.P. Honda, which focused on creating stores that would achieve the highest level of customer satisfaction by offering sales, service, and spare parts supply as the “three-in-one” package. A.P. Honda established a network of “5S dealerships” that offered Sales, Service, Spare Parts (for both service parts and customization parts), Safety (rider education), and Second Hand (repair and sales of certified pre-owned bikes).
Thanks to both its product and sales strengths, the Nova-S was well received by young people of Thailand, and in 1988, one year earlier than originally targeted, Honda gained the largest share of the Thai motorcycle market. In spring 1994, only six years after the launch of the Nova-S, total sales of the Nova Series models topped 1 million units. The success of the Nova-S was largely attributed to marketing activities that fit well with the local market and put the hearts and minds of young Thai people first. From there onward, the basic stance of always thinking from the other person’s perspective and valuing people-to-people communications and trust have been widely applied to the planning of all local products.

Pursuing Products for the Times:
Meeting the Needs and Environmental Regulations of
Each Country

To further strengthen local product development in Thailand, Honda R&D Southeast Asia (HRS), a local representative office of Honda R&D in Singapore, and Honda R&D Southeast Asia (HRS-T), a core development operation located in Bangkok, Thailand, were established in 1988 and 1997, respectively. In order to establish operations with marketing and sensing functions in other Asian countries as well, and to promptly respond to market needs in close proximity to its customers, HRS-T branch offices were opened in Indonesia (HRS-IN) and Vietnam (HRS-V) to promote the optimization of sales, production, and R&D. Although seriously hit by the 1997 Asian currency crisis, the ability of Honda to sustain development of both technology and products led to its rapid market recovery.
In the early 2000s, Honda further accelerated its motorcycle development in Thailand in line with its 1997 declaration to shift entirely to the production of 4-stroke motorcycle engines. Furthermore, besides quickly responding to traditional user needs, the company also developed its business with an eye toward tighter environmental regulations. In FY2003, Honda completed its full conversion to 4-stroke engines in Thailand. The 2-stroke engines, which were compact, lightweight, inexpensive, and powerful, had until then been widely used in small motorcycles, scooters and other vehicles. However, Honda was changing over to 4-stroke engines, which had the advantage of being more fuel efficient and clean. Moreover, in 2003, the Super Cub-type Wave125i debuted in Thailand, equipped with a compact PGM-FI (Programmed Fuel Injection), a electronically-controlled fuel injection system, that further reduced exhaust gas emissions.
By addressing these environmental requirements ahead of other motorcycle manufacturers, Honda successfully changed the competitive landscape of the market. Following this success in Thailand, similar challenges were made in other Asian countries as well.

Wave 125i (Wave 125 equipped with PGM-FI) unveiled at the Bangkok Motor Show

Recapturing the Top Market Share in Indonesia

Dating back to the 1960s, Honda entered into a partnership in Indonesia with the local Astra Group and soon started producing knock-down motorcycles. In 1971, local production began, initially using imported parts, with all assembly performed locally. Then, in 1984, Honda Astra Engine Manufacturing (HAEM) was established as a joint venture for the production of motorcycle engines.
In Indonesia, Super Cub-style motorcycles have been the dominant form of transportation for many years. With a population that passed 200 million back in 1998, the country has continued to grow since then. In terms of economic development, Indonesia has also produced and sold the largest number of Super Cubs in the world since the early 2000s.
The fact that the bike is also known affectionately as ‘Bebek,’ which means duck in the local dialect, shows how much Super Cubs are loved by the Indonesian people.
However, the outstanding popularity of the Super Cub in Indonesia was eventually threatened. In the early 2000s, Yamaha Motor Co. Ltd., which had long been a competitive rival in the Asian motorcycle market, changed its strategy to take the lead in scooter sales. Since Indonesia was the fastest growing country in Asia, with a rapidly growing younger population, Yamaha launched a major advertising campaign which referred to its stepless belt-converter-style ‘gearbox’ as AT (for automatic transmission), saying that “AT is a fashionable and outstanding new technology, which the Super Cub, which requires clunky gear changes, just doesn’t have.”

Battling Chinese Counterfeit Products in Vietnam,
the ‘Super Cub Paradise’

In Vietnam, the Super Cub has been plying the roads of the country since the late 1970s, earning the country the nickname “Super Cub Paradise.” During the Vietnam War, when entire families were forced to flee the flames of war on a single motorcycle, only the Honda Super Cub kept going till the end, often saving the family’s lives. Because of such impressive performance of Honda motorcycles, many people in Vietnam at the time called all motorcycles as “Honda.”
However, even after Vietnam reunified as a single socialist state and adopted an embargo policy on foreign companies entering the market, as well as foreign products, the Super Cub remained popular among people in Vietnam and was brought into the country through various channels.
Eventually, Vietnam reached a major turning point with its Doi Moi Policy, which went into effect in 1986 and promoted such reforms as the transition to a market economy and international cooperation. In the late 1990s, industrialization and the introduction of foreign capital were actively promoted, and Honda established Honda Vietnam (HVN) in 1996 to begin local production. The mainstay was the Super Cub-type Super Dream, which was equipped with a large carrier basket mounted in the front, and designed with a tandem seat that could accommodate two passengers to meet the large demand for bike taxis. This reflected its exceptional ease of operation on the roads of Vietnam. People’s expectations for this model were greatly raised when Honda began local production and sales.