Whether you’re from Asia, Europe, America, Africa, or any continent, it’s almost impossible that you have never seen the “H” logo or anything from Honda’s factory. This well-known and reputed company is one of the biggest manufacturers in the automobile industry.
A worldwide presence, thousands of dealerships, and continuous innovation have made the company reach a new height in its industry and become the most extensive motorcycle manufacturer. Besides, with many weaknesses and threats, they are still going strong, which we will know in this Honda swot analysis.
Let’s have a glance at the company overview first!
Honda: Company Overview
| Company | Honda Motor Co. Ltd. |
| Industry | Automobile |
| Founded | 24 September, 1948 |
| Founder | Soichiro Honda |
| President & CEO | Toshihiro Mibe |
| Headquarter | Minato, Tokyo, Japan |
| No. of Employees | 204,035+ |
| Annual Revenue | ¥14.95 trillion (FY 2022) |
| Website | global.honda |
When Japan was still recovering from the Second World War, just a couple of years later, a guy named Soichiro Honda founded the “Honda” alongside Takeo Fujisawa in 1948 with the dream of making racing cars.
After seven decades, Honda is one of the most renowned companies fulfilling other people’s dream of getting cars at affordable prices. A total of 204,035 employees all over the globe have been working under Honda’s umbrella to fulling those dreams.
That’s not all! Honda also makes various products which we will get to know in the following sections, along with the company’s internal and external factors.
Product & Services of Honda Motor Co. Ltd.
Automobile | Motorcycle | Aircraft | Power Equipment
Honda Competitors
Ford | Mercedes | BMW | Toyota | Hyundai | Audi | Nissan
Did You Know?
A guy from Maine called Joe Cicero had a 1997 model Honda Accord. And he completed one million miles with that car in 2011 without changing the original engine. As an award, Honda gifted him a brand new Honda Accord 2012.
Strengths – Honda SWOT Analysis
Extensive Product Line: Honda has a variety of products in four different categories. Even though they are mostly known for their motorcycle and automobiles, the product line doesn’t end there. The line is stretched from making engines, power tools, aero engines, and HondaJet. Even they also have financial services in their portfolio.
Worldwide Presence: You will find Honda’s products in almost every country in the world. In the USA alone, it has more than 1000 dealerships. As a multinational company, the presence of the company is recognized throughout the globe. They could reach this far with local branding and an excellent supply chain and export system.
Strong Financial Position: Honda is one of the most valued companies in the world. Honda is reaching a new height with more than $126.055 B of revenue in 2022. Although they face losses because of the pandemic, they are starting to recover. With enough capital, they can expand their empire with new and innovative products to new markets.
Strong R&D Wing: To bring new and innovative products to the market, every company needs to have a vital research and development wing. In 2022, Honda invested more than $6.576 B in its R&D projects. Even though it’s a 7.79% less investment than the previous year, it shows how dedicated Honda is to its new and innovative products, which keep coming every year.
Motorcycle Market Leader: Honda’s manufacturing capability enabled them to become the largest motorcycle and automobile manufacturer worldwide. In 2022, they sold more than 3.28 M cars globally. Their manufacturing process is so effective and efficient that it is one of the core reasons to become the market leader in this category.
Weaknesses – Honda SWOT Analysis
Unbalanced Revenue: We all know that having all the eggs in one basket is not a good idea. With a diversified product portfolio, Honda has an uneven revenue model. Most of the revenue (85%) comes from two categories, Automobiles, and motorcycles. Any minor inconvenience in these categories could lead the company to a revenue downfall.
Complex Organizational Structure: In an organizational bureaucracy, red tape kills the innovation process, the entrepreneurship energy, and the employee’s spirit. Unwilling to change the corporate culture and structure is one of the primary reasons for the company’s downfall, and Honda is facing that. A few years back, the CEO mentioned these issues and was on the way to taking control of the situation.
Low Social Branding: In this modern world, Social branding has become one of the primary tactics to stay relevant and reach young customers. Honda, they were always a bit backdated in this case. As the target market is changing faster than anticipated, they need to adapt to the new ways of communication and how these work.
Failed Merger: For various reasons, whether strategic, geographic, or financial, companies merge with other companies. Honda is one of the largest manufacturers in the world, and Hero is the most significant player in the motorcycle industry in a large country like India. A failed merger in India left Honda in a lousy market position.
High R&D Cost: Innovation and products require long-term and highly invested research and development processes. The process gets more difficult in the automobile industry as the price of the materials increases daily. For this reason, in 2022, Honda was forced to reduce its investment in the R&D wing by 7.79% from the previous year.
Opportunities – Honda SWOT Analysis
Market Expansion: For industries like automobiles and motorcycles, their focus new markets are developing countries. Developing countries pour money into building new infrastructure, and new roads and vehicles come with that. A company like Honda, which has enough global presence around the world, they have the perfect access and opportunity to get into these industries.
Eco-friendly/Electric Vehicle: The world is moving toward more green energy and less carbon emission. As a result, the logistic sector of developed and developing countries are trying to adopt this. Even the market for electric vehicles doubled in 2022 than 2021. Even after 2035, there will be no non-electric vehicles in Europe.
New Product Line: Following the previous point, Honda can introduce new vehicles in its product lines. And they even started doing it with the new electric cars. And in 2023, one of the biggest news from Honda is they collaborated with Sony to bring a new brand named, Afeela, which will be a flagship brand.
Booming Economy: The entire world went through a massive economic crisis during the pandemic. But it’s slowly and steadily growing, and so are many developed and developing countries. As a result, the automobile industry is expected to grow by 3.3% in 2023. Besides, as developed countries give incentives to electric cars, it will be massive.
Threats – Honda SWOT Analysis
High Competition: The automobile and motorcycle market is filled with highly competitive giants like BMW, Hyundai, Toyota, Volkswagen, etc. In this cut-throat competition, it’s challenging to survive without innovations and disruptive products. Besides, when its presence is worldwide, the competition gets more complicated.
Economic Recession: Even though the world’s economy is booming, economists predict that a recession will come in a few years. And there are already signs of it. It dramatically affects the automobile industry as the products are high-priced. As a result, this industry might face another downfall.
Government Regulations: In developed countries, it’s difficult for Honda because of many government regulations. Mainly because of its profit-based tactics, violation of safety laws, and lots of carbon emission issues from their vehicle, which has a harmful impact on the environment and overall human health.
Rising Material Cost: The price of raw materials for automobile parts have been doubled and, in some cases, tripled. As a result, that impacts the entire industry, and the prices have skyrocketed. Most of the manufacturers even reduced their investment in the R&D wing for that.
Alternative Transportation Modes: Most developed and developing countries are trying to build the most suitable public transportation modes possible for the general public. The goal is to reduce dependency on private vehicles, and people use more and more public transport. And these policies have been adopted by most of the developed European countries.
[Bonus Infographic] SWOT Analysis of Honda
Recommendations for Honda Motor Co. Ltd.
After a thorough swot analysis of Honda, we have an overall understanding of the current situation. Based on that, here are some recommendations for the upcoming days;
- The priority should be electric vehicles. Focusing on these and capturing the market will change the game and resolve most threats.
- Honda should focus more on other products to balance their revenue portfolio.
- Changing the complex organizational structure and bureaucracy would efficiently the work and decision-making process.
- They should focus more on local and social branding.
- No matter what, reducing the investment amount on the R&D wing would be the wrong decision.
- Expanding the market into more developing countries will bring new opportunities and revenue.
Frequently Asked Questions (FAQs)
Is Honda Korean or Japanese?
Honda is a Japanese MNC. Although the name is taken from the Chinese language from the founder’s surname.
Is Honda a Good Car Brand?
Yes, Honda is a good car brand. Their cars are well-built and give excellent performance. Besides, they are very affordable compared to other competitors.
Final Words on Honda SWOT Analysis
So, that’s everything from us about Honda and all the internal and external factors related to it. With a vast number of products worldwide, Honda is one of the top players in its industry. On the other hand, the battle will be difficult in the upcoming days, that’s for sure. But the ability to adapt with time and consistent innovation will take Honda far. We will get to know more about another brand in another article. Have a great day!
References
- Wikipedia contributors. (n.d.). Honda Motor Co. Ltd.. Wikipedia.
- Products. (n.d.). Honda Global.
- Honda Revenue 2010-2022 | HMC. (n.d.). MacroTrends.
- Honda Research and Development Expenses 2010-2022 | HMC. (n.d.). MacroTrends.
- Placek, M. (n.d.). Number of passenger cars produced by Honda worldwide from 2013 to October 2022. Statista.
- Process. (n.d.). Honda Global.
- What Are The Major Sources Of Revenue For Honda Motor Company? (2018, September 27). Trefis.
- Shirouzu, N. (2017, September 7). How Honda lost its mojo – and the mission to get it back. Reuters.
- Jaekel, B. (n.d.). Honda ramps up social presence in millennial-centric push for Civic redesign. Marketing Dive.
- Hero, Honda split after 26 years. (2018, March 30). DNA.
- The Global Electric Vehicle Market In 2022. (n.d.). Virta.
- Electric Vehicles. (n.d.). Honda Global.
- Hawkins, A. J. (2023, January 5). Sony and Honda just announced their new electric car brand, Afeela. The Verge.
- Horsley, S. (2023, January 6). The U.S. job market is still healthy, but it’s slowing down as recession fears mount. NPR.org.
- Ivory, D. (2015, January 8). Honda Fined for Violations of Safety Law. The New York Times.
- Increases in raw material prices have a serious impact on automotive suppliers. (2022, May 31). Sneci.
- Kuss, P., & Nicholas, K. A. (2022). A dozen effective interventions to reduce car use in European cities: Lessons learned from a meta-analysis and transition management. Case Studies on Transport Policy, 10(3), 1494–1513.
