Honda in Europe free essay sample

The Honda Motor Company first entered the European market in the early 1960s through the sale of motorcycles. Honda’s motor vehicle sales in Europe have been relatively poor, especially in the previous five years. And Honda executives wonder why their global strategy is sputtering. History of Honda and Automobile Industry In 1946, Souichiro Honda founded the Honda Technology Institute. The Company started as a motorcycles producer and by the 1950s had become extremely successful in Japan. In 1956, Honda entered the US market and was able to position itself effectively. In the early 1960s, the company commenced automobile manufacturing and participated in Formula F-1 to assist its technology development. Until the early 1990s, the company experienced serious organizational mismanagement resulting from tension between the technology side and the marketing sales side. The automobile industry worldwide is in the mature stage of its life cycle. In the late 1990s, industry experts stated that only six or seven companies would remain global players, while other companies would be forced to sell in niche markets. Unlike their European and American counterparts, Japanese automobile companies, including Honda, did not adopt the MA strategy for expansion. To remain a global competitor, Honda instead expanded its operations by setting up plants in regional markets. Honda in Europe Currently, Honda has five regional operations : North America, South America, Japan, Asia-Oceania, and Europe. There are number of reasons for low sales in Europe. Honda entered the European market rather late, and its first production facility in the region was built in 1992, at a time when Honda was still only a minor player in the Japanese market. Prior to 1992, Honda Europe was forced to imports its vehicles from the United States, making its impossible for the company to aggressively attack the European market. The important reason for the lack of success was the European market was highly saturated locally owned car manufactures such as Saab, Volvo, BMW, Audi, VW, DM, Opel, and other foreign company such as Toyota, Nissan, Fordm also make the European market extremely competitive. Honda European Marketing Products, Honda’s European manufacturing plant is located in the UK, and as a result, the country has more Honda models than any country in Europe with a total of of 20. Price, The prices of Honda’s vehicles in Europe are comparable to similar cars produced by local manufacturers. Distribution, the image of Honda’s vehicles and motorcycles in Europe is aligned together. Consequently Honda vehicles throughout Europe are distributed at the same locations that their motorcycles are. Recently, due to the depreciating Euro vis-a-vis the US dollar, cars manufactured in the UK have also been exported to the US. Promotion. The promotion of Honda’s motor vehicles is essentially the same throughout Europe, whether in France, Germany, Italy or the UK. The company spends very little time and money in promotion, however. In the recent 2002 launch of the Jazz (known as the Fit in Japan), the company relied heavily on word of mouth and on a website created especially for the occasion. A sense of fun was also attached to the website, in an attempt to draw in the young woman. Once inside the Jazz website, the user could easily find the nearest dealership to purchase the vehicle. European Sales Honda’s most successful year was in 1998, however since then sales have been decreasing dramatically. Honda’s motor vehicles have been relatively unpopular in the majority of Europe, in particular Italy and France. European Culture The relative poor showing of Honda vehicles in Europe may be explained by a number of reasons. The main problem was that the company failed to truly understand the culture of Europe and more importantly it treated Europe as one giant single market. Though France, Germany, the UK and Italy are all European, cultural differences abound between them. One theory that explains the differences between the four nations is that of high-context versus low-context cultures. In a high-context culture, the interpretation of messages depends on contextual cues like gender, age, balance of power, etc. and not on physical written text. In a high context culture there are things that are not said but are understood. Countries considered to be high-context cultures include China, Japan, Italy, France, Spain and the Latin American countries. Cultural Context Successful advertising in low context cultures differs from that in high context cultures. An advertisement for a high-context culture is based on an implicit style where the emphasis is on the overall feel and outlook rather than the feeding of pure information. In this type of advertisement, the actual product may not even be shown. The audience may be only given implied images and sublime messages. Honda’s Jazz website contained a large amount of information which would have been too much for high-context cultures such as the French and the Italians. In addition, high context cultures have been much slower than their low context counterparts when it comes to adopting the Internet. France is a high-context culture where style and image is of the utmost importance. The perceived quality of a product means that the French have a bias towards the style and image of a product. The image of Japanese cars in France is relatively poor, dating back to the 1930s when Japanese manufacturers entered the European market with low quality products. Italy, like France, is a high-context culture where a great deal of emphasis is placed on feeling and style. The Italian culture is reflected in their daily lifestyle, which gives a sense of romance to the people living there. As in France, the Italians view Japanese cars as small low quality vehicles, suitable only as a second family car. The most popular automobile in Italy, especially for families, is the Fiat. The dominance of the Fiat is due to the Italians, like their high-context cousins the French, being very patriotic. Germany. Of the four main European countries that Honda is sold in, Germany has had the second highest sales volume.