Company Overview

Currently Japan’s No. 3 automaker, Honda got its start as a piston ring company. Its founder, Soichiro Honda, had spent nine years with Tokyo service station Art Shokai before receiving a patent in 1931 for metal spokes that replaced wood in wheels. Honda started his company in 1937.

During World War II, Honda supplied metal propellers for Japanese bombers. When the company’s Hamamatsu factory was destroyed in 1945 by bombings and an earthquake, Honda sold it to Toyota.

The following year, the company began utilizing war-surplus engines to motorize bicycles. A cheap and efficient mode of transportation, Honda’s moto-bicycles proved extremely popular. The company began to make its own engines soon after, and Honda eventually renamed it Honda Motor Company in 1948, the same year it began to produce motorcycles.

With financial help from a 1954 public offering from Mitsubishi Bank, the company began expanding and exporting. Honda first came to America in 1958, setting up the American Honda Motor Company in Los Angeles the following year. In 1959, it introduced the U.S. to its first model, the C100 Super Cub motorcycle. The company’s slogan, “You meet the nicest people on a Honda,” was intended to counter the stereotypical biker’s image.

In the early 1960s, Honda added overseas factories and began developing prototypes for cars. It began producing small trucks, sports cars, and minicars soon thereafter, originally intended for the Japanese market. The company began selling its N600 model in the U.S. in 1970, but its diminutive size and 600 cc engine didn’t endear it to American public.
Honda wouldn’t have to wait long to regain favor in the U.S. with a car, however. In 1973, its Civic model caught on, in great part due to the worldwide energy crisis. Honda’s relative fuel efficiency and innovative engines allowed its cars to meet newly created emissions standards without expensive, added-on technology. Three years later, the Accord immediately caught on with consumers, and has been a consistent best-seller in the U.S. since.

The Prelude, which debuted in 1979, was Honda’s first attempt to create an exciting, cutting-edge road car. Its 1987 model was the world’s first passenger vehicle with four-wheel steering, and was Wheels magazine’s Car of the Year.

In 1997, the company bought Peugeot’s plant in Guangzhou, China,  and increased its vehicle production in the U.S. the following year with a new ATV plant in South Carolina. In 1998, American Honda Motor Company agreed to pay $330 million to settle a class-action lawsuit. Filed by about 1,800 automotive dealers, the suit accused Honda of delivering popular models only to those who paid bribes. In total, 18 American Honda executives were convicted.

In 2000, Honda announced that its super low-emission engine would debut on the market in 2001, considerably ahead of its competitors’ versions. In 2001, Honda’s R&D unit set up a solar-powered hydrogen production station in California, as part of its plan to create renewable-energy fuel cell vehicles.

Honda announced plans to enter the aviation market in 2006, with what CEO Takeo Fukui called the “Honda Civic of the Sky.” The planes, which the company plans to offer starting in 2010, will be six-seater, twin-engine jets called HondaJets.

As motorcycle sales lag in the U.S., Honda is enjoying strong bike sales in Asia and—particularly—South America, where sales were up about 20 percent in 2007 over the previous year. Historically the world’s third-largest market for motorcycles, Indonesia saw sales of motorcycles drop about 14 percent in 2007, though Honda intends to continue to invest in promoting new products in the country.

While the demand for cars dropped in the U.S., in part due to rising gas costs, Honda’s sales increased about 3 percent in 2007. Its subcompact Fit model’s launch that year was timed perfectly, as American automakers did not offer small cars that were compelling enough to compete.