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Here's a nice article on Honda's steady strategy from the Washington Post.


By Warren BrownSunday, August 24, 2008

Honda could have been a contender. But it settled for being a winner instead.

The Japanese automobile manufacturer historically has ranked near the middle of the world's top 10 car companies in annual sales, content to earn a living selling mostly small cars with small engines that run nicely on relatively small amounts of gasoline.

That strategy once spawned detractors -- automotive journalists and some industry analysts who urged Honda to join the big league, to start rolling out big cars with big engines, to serve up something like a hot coupe with a banging V-8.

There were rumors that Honda would take the bait. "Those rumors have been around for 20 years," said Dan Bonawitz, Honda's U.S. vice president for corporate planning, speaking to journalists here.

Honda nibbled, offering up the car-based Ridgeline pickup, a bevy of mid-size sport-utility vehicles, and several impressive Acura and Honda sedans with V-6 engines. But Honda mostly remained true to its small-engine legacy, resisting the pressure to produce something with a V-8 and refusing to join Toyota and Nissan in taking on Detroit in the battle for big-truck supremacy.

"We chose to position ourselves for sustainable success," Bonawitz said.

Bonawitz has been saying that kind of thing for several years. But many of us in the media dismissed it as the convenient excuse of a company that didn't know how to make a competitive V-8.

"You could be a contender," we told Honda. "You could play with the majors. Look, even Hyundai is coming out with a V-8 in its Genesis luxury car. Are you guys going to let the Koreans beat you?"

Bonawitz and his people didn't listen. They just kept cranking out cars and pseudo-trucks -- the Ridgeline isn't a real truck -- with four-cylinder and six-cylinder engines. As a result, Honda is now in a league of its own, experiencing steady increases in vehicle sales in a market where most of its rivals are faltering.

Look at the devastation of the U.S. automotive landscape. Toyota is down. Nissan is down. General Motors and Ford are way down. Chrysler is on life support, awaiting rescue from potential partners who can supply it with the cars, especially small cars, it desperately needs to survive.

Honda, meanwhile, is expanding production of its hot-selling Civic compact cars in the United States. It is trying to cope with soaring consumer demand -- up nearly 72 percent in 2008 over 2007 -- for its Fit subcompact, which has been smartly redesigned for 2009.

Honda is planning annual U.S. sales of 85,000 Fits, which is so globally popular that the company is assembling it at plants in Japan, Brazil, Thailand and Indonesia.

"Our business strategy is more like that of the tortoise than it is the hare," Bonawitz said. "We might not be the first to come out with the biggest engine. But we concentrate on what our consumers want -- quality, efficiency, innovation. That doesn't always make a big splash. But it helps us to survive in challenging times like these."

That does not mean Honda will never produce a V-8 for the U.S. market. The company certainly knows how to produce powerful engines and fast cars, as evidenced by the success of Honda-engineered products in a variety of racing venues.

But, unlike its Detroit corporate brethren, Honda never really put much stock in the notion of winning at the track on Sunday and selling in the showroom on Monday. At Honda, a car for the track is one thing. A car for the practical demands of daily life is quite another. Put another way, the company has long understood that getting something right on the track does not ensure getting it right in the marketplace.

A HondaV-8?

Bonawitz laughed.

"These are very challenging times for our industry," he said. "We are witnessing what is likely to be a watershed moment for the American automobile industry" -- a moment when smart power, getting the most out of an engine using the least amount of fuel, trumps horsepower, Bonawitz said.

"At Honda," he added, "we've always been geared toward this moment."