Honda remains one of the industry’s most profitable company’s and as Chris Wright discovers, it’s not all down to cars.
How old is the average Honda driver?
“Plummeting”.
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That’s the answer according to Ken Keir, managing director of Honda UK and senior vice president of Honda Europe.
He wasn’t surprised that it was the first question, but the age of UK owners has been a mystery to many of Keir’s Honda colleagues around the world and particularly the United States where it is seen as a young person’s brand.
For the record, the age has ‘plummeted’ from 59 10 years ago to 49, but it’s a bit of a double-edged sword.
Keir said: “It is a good thing that our age profile is coming down, but by 2016 it is estimated that 60 percent of the UK population will be over 45 and the so-called silver economy has most of the disposable income.
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By GlobalData“I have got used to the age question and I think our age profile has been high because Honda does not discount its cars. One reason the age is coming down now is that company fleets are moving back towards user-chooser which is good news for us.
“We have tended not to get too involved in bulk fleet orders because we want to protect residual values. Company car drivers are now increasingly being given the opportunity to “top up” what their companies are offering in terms of cars and make their own choices.”
Honda had a pretty good year in 2006 – its best ever with worldwide sales totalling 20.44 million…… that’s not just cars remember.
Honda does other things including motorcycles, lawn mowers, outboard engines, power products and even, as we move into the future, aeroplanes.
This is Honda’s seventh consecutive year of growth and as Keir modestly puts it: “We are in pretty good shape and on course for 30 million product sales by 2010.”
In terms of cars, Honda had its best-ever year in Europe in 2006 with sales of around 350,000, while motorcycles were slightly down at 335,000, the company remains the market leader in the sector.
A rise in UK car sales of 5 per cent, while pleasing, was still the lowest in the region, said Keir. “At Honda Europe we have been concentrating on the emerging markets which is not surprising when you look at the numbers in Russia where the market is expected to grow to 3 million vehicles a year by 2008, up from 1 million in 2003.”
In the UK Honda passed the 100,000 sales barrier in 2006 and from October it will hit full capacity at its car plant in Swindon.
Swindon is now making money. “It was hard for us, particularly in the late 1990s, in terms of exchange rates with the Euro but we are through that now. We have just taken on an additional 700 people at Swindon which will push the total workforce to 5,000 and full capacity will be reached at 250,000 vehicles a year.
“Swindon is also moving up Honda’s own quality index.”
In terms of environmentally-friendly vehicles Honda sees hybrid as the short term answer while continuing to work on fuel cells in the long term.
Keir added: “We will have a more financially accessible hybrid available by 2009.”
Around 200,000 a year of these will be available from 2009, built in Japan and with around half of production going to North America. Around the same time the Honda FCX fuel cell car will also be available in the UK.
“It is something we will have on offer but there will obviously be infrastructure problems in getting hold of hydrogen for the fuel cells. This is an issue that will have to be addressed as we move into the future.
“Fuel cells are a long way from being economic and some pundits are saying they are still 20 years away. With the FCX Honda will offer it from 2008, but the issue is how you create hydrogen.”
Honda is currently looking at the technology involved in creating hydrogen using solar panels.
Keir said: “If this is developed to its ultimate conclusion then it could be possible to generate hydrogen in your own home.”
In his current position, Ke
ir also oversees Honda’s UK car factory at Swindon and the future looks bright. Around 700 new employees have been taken on taking the workforce total to 5,000. In October the plant will reach full capacity of 250,000 vehicles a year.
Keir said: “The pressure on Swindon, as always, is cost and to keep control of that we have to continually look our manufacturing processes and our supply base. Interestingly we still have the same local content as we did a few years ago, around 60 per cent coming from British companies – but the difference is that what they supply us with increasingly originates from overseas.”
Honda, he said, was committed to its UK factory no matter what. “Of course there are cheaper places to build cars but Honda has invested £1.3bn of its own money and it’s up to us in the UK to make it work – it is also the reason why Honda never expects any investment from the Government.”
The company will not go beyond the current installed capacity of 250,000. Keir added: “This is the optimum figure for Honda factories all over the world – what we can do is perhaps shift production between plants from time to time as demand rises and falls in certain areas. Swindon, like our others plants is very flexible.”
There are no plans, either, to introduce the Acura brand into the UK or Europe following the example of Lexus and Infiniti. “We don’t really see the point in establishing a whole new dealer network and incurring the costs associated in establishing a stand-alone brand. There are other ways we can work with Honda and Acura – for example the next Accord will be badged Acura in the United States.
How about future models? Keir sees a future for smaller, more utilitarian vehicles.
“People have the perception of the SUV as a big car but I think there is a future for smaller utility vehicles and we are already seeing that to a certain extent with the CRV.
“In Japan the ‘cube’ idea is really catching on. The design might be very square but people are discovering this concept is very usable and comfortable.”
Finally, how about Formula 1 – is it working for Honda?
He said: “Is it good for Honda engineers? Yes. Has it raised worldwide awareness? Yes it has. Does it raise confidence in the product? If successful, then yes. Does it work in terms of sales? Yes again. Does it increase showroom traffic? Yes it probably does.
“Is there an absolute measurement of any of this? I really don’t know.”
