Honda Cars : Honda to overhaul sourcing method for emerging markets push | 2013 New Honda Car Reviews 0

(Reuters) - Honda Motor Co will overhaul its sourcing strategy by ditching its one-spec-fits-all method on global car models to better compete with Hyundai Motor and others in emerging markets, an executive said on Tuesday.

Honda, Japan's No.2 automaker, has until now used a common blueprint for components on cars built and sold globally for efficiency's sake, and to offer consumers around the world the same specifications for those models.

But Masaya Yamashita, head of Honda's purchasing operations, said that strategy was outdated and making some of its cars unnecessarily pricier in China, India and other regions at a time when South Korea's Hyundai and others were boosting sales with cars that were a better fit for local consumers.

"Hyundai has become a very tough competitor for us and they're growing at an incredible pace, along with Chinese and Indian automakers, because they're looking at components from a new angle," Yamashita told Reuters in an interview.

"The stereotype used to be that the cheap prices came from lower quality, but that's no longer the case. We need to operate with a brand new standard for components," he said.

By coming up with several different blueprints on vehicle components, Honda would aim to slash purchasing costs on the next-generation Fit subcompact, one of its best-selling models, by about 20 to 30 percent in emerging markets, Yamashita said. The fully remodeled Fit, expected around 2012 or later, would be the first car to reflect the new sourcing method, he said.

Honda builds the Fit, called Jazz in some markets, in Japan, China, India, Thailand, Indonesia, Britain and Brazil, and currently uses the same design and materials for most components in all seven countries.

That means components must meet the highest common denominator for specifications, leading to steep costs, he said.

"For example, if we were designing a cup, we're designing one that could withstand the intense heat in India all the way up to the freezing weather in Canada, and that's a waste."

BROADER SELECTION
Yamashita said automakers were now able to choose from a broader selection of competitive parts makers in many Asian markets thanks to the expansion of Western suppliers, the entry of Hyundai's Korean suppliers and the improved quality of homegrown parts makers in emerging markets.

"Doing business with new suppliers is helpful in giving us fresh ideas for designing parts," Yamashita said. "In the long run, this kind of competition will also be good for Japanese parts makers that we've done most of our work with so far."

Japanese suppliers are already under intense pressure to slash costs, disadvantaged by a strong yen.

Honda has said there was little the automaker could do in the near term to avoid currency-related losses.

But Yamashita said Honda had asked some of its domestic suppliers to shift production of components manufactured and used in Japan to their Asian factories to lower purchasing costs.

"We usually wouldn't do this for the duration of a vehicle's model cycle, which is typically about five years, but we've asked some suppliers to do this," Yamashita said.

"If the dollar continues to trade around 85 yen, it's inevitable that the import ratio of parts will rise."

Source;
http://www.reuters.com/article/idUSTRE68K0OT20100921

Honda Cars : Honda airs confidence as market rebounds | 2013 New Honda Car Reviews 0

Honda Motor Co. Ltd. executives don’t cite the fable of the tortoise and the hare when discussing the company’s future, but the story seems apt.

The automaker, with the bulk of its U.S. production in Ohio, has seen some bright spots in 2010, including improving sales. It has also encountered troubles, including three recalls involving nearly 1 million vehicles and an inability to convert schadenfreude to sales following the larger woes of competitor Toyota Motor Corp., which has recalled more than 7.3 million cars and trucks this year.

But to John Mendel, executive vice president at sales arm American Honda Motor Company Inc., and Bob Nelson, North American purchasing manager with Honda of America Manufacturing Inc., those are short-term hurdles for a company focused on the long race. And how the company responds is critical to the 13,500 workers it employs in the state.

“Difficult times make us all smarter,” Mendel told Columbus Business First before addressing a transportation conference at Ohio State University on May 3.

Staying sharp
Honda struggled in 2009. Still, it fared better than most competitors, Mendel said. He noted the car maker is headed into the coming years adhering to the same tenets that carried the business in the past – focusing on the customer and producing affordable, reliable vehicles.

Honda projects North American sales to rise 14 percent to 1.5 million vehicles this year from 1.3 million sold in the year ended March 3. Mendel acknowledged industry turbulence has improved rivals, particularly the Detroit Three, which plan to build the smaller, fuel-efficient vehicles that have been Honda and Toyota strengths.

According to Automotive News, Toyota and Honda lost market share in the first quarter – a 1.2 percent decline for Toyota and a 0.4 percent drop for Honda. Ford Motor Co., General Motors Co., Nissan Motor Company Ltd. and Volkswagen AG all gained. And Korean automaker Hyundai Motor Co. has gained on the Japanese leaders in recent years.

“A faster track helps the industry,” Mendel said. “It keeps us on our toes.”

Upcoming additions to Honda’s lineup include a wagon built on the Acura TSX chassis, similar to the new Crosstour that is assembled in Marysville on the Accord platform. Also planned are updated Civic and Odyssey designs, a CR-Z hybrid and a four-door Acura ZDX coupe.

Competition may be threatening from all sides, but Toyota remains Honda’s biggest rival. To power sales amid its recalls, Toyota hiked its purchase and lease incentives in March. It resulted in a 41 percent sales boost for the month, with April sales rising 24 percent over a year earlier.

Both increases trumped Honda’s gains. But where some industry observers saw a missed opportunity, Mendel questioned the depth of the opportunity pool. Incentives, he said, were not the whole story. Loyal customers who bought into Toyota’s image long ago came to its rescue, he said.

“Many Toyota owners already have rejected Honda for whatever reasons,” he said. “They’re less likely to switch over.”

Managing inventory
Honda has been reluctant to depend on incentives to drive sales, and industry upheaval hasn’t changed its mind. Incentives are a tactic, not a strategy, Mendel said. The company uses them to cut the inventory of vehicles with redesigned models about to be released, but otherwise it isn’t as aggressive as others. It offered some lease deals in response to Toyota’s incentives, but otherwise has avoided reduced financing rates and cash-back offers.

“We’d rather flex our manufacturing than incentivize the vehicle,” Mendel said of Honda’s method to manage it inventory.

Flexibility is a Honda hallmark, but even it and its suppliers struggled with inventory balance in 2008 and 2009. Employment and work hours fluctuated in both years, most notably as sales of the Marysville-made flagship Accord stalled and cars filled up lots.

There were lessons learned, Nelson told Business First after the company’s annual supplier conference April 29. “The fast-changing environment exposed some of our weaknesses,” he said.
Honda is working to eliminate product problems prior to mass production, which means working with suppliers earlier in design and planning.

Nelson said there was attrition in Honda’s supplier ranks, but they were comparable to regular fluctuations in the supplier base. The most turnover comes at new model years, he said, when new technology and features create opportunities for new suppliers.

Source;
http://www.bizjournals.com/columbus/stories/2010/05/10/story4.html?b=1273464000%5E3317951

Honda Cars : Honda is suppliers' favorite, study shows | 2013 New Honda Car Reviews 0

BY JEWEL GOPWANIFREE PRESS BUSINESS WRITER

A study evaluating the relationships between auto suppliers and six major automakers shows that Honda Motor Co. has the best rapport with its parts makers, and that Ford Motor Co. has made strides to improve its relationship with suppliers.

In its eighth annual study, Birmingham-based consulting firm Planning Perspectives Inc. surveyed 231 suppliers between February and April, asking them questions such as how much they trust their customers and how often customers make last-minute changes.

"It really comes down to individuals believing that having good relations is worthwhile," said John Henke, chief executive officer of Planning Perspectives.

The survey comes as automakers and suppliers suffer from low cash reserves as a result of falling auto sales -- a consequence of a national recession that has slashed revenue across the industry.

While Honda took the top spot from Toyota Motor Co., scores for the two declined.
Ford managed to take fourth place in the study -- behind Nissan Motor Co.

Chrysler LLC was last for the second year in a row.

Ford's scores show meaningful progress in communicating with suppliers and helping them improve quality.

The higher scores come as Ford continues to cut its supply base from more than 3,000 in late 2005 to its goal of having 750 key suppliers. The company is trying to concentrate its purchases among fewer suppliers so those parts makers have enough business to be profitable.

"The business is about profitable growth for all," said Tony Brown, Ford's purchasing chief, in an interview last week. "In the end, we need to be the customer of choice for our suppliers. They need to have a healthy business in order for it to work for them."

Source;
http://www.freep.com/article/20090525/BUSINESS01/905250431