Honda expects sales of 1.03 million in Japan in FY 2014

New mini vehicle and new compact series boost sales

2014/05/08

Summary

N-WGN
The wagon-type N-WGN launched by Honda in November 2013 as the fourth model of the N-series for the mini vehicle market (at the 2013 Tokyo Motor Show)
VEZEL
The Fit-based VEZEL hybrid sports utility vehicle launched by Honda in December 2013 (at the 2013 Tokyo Motor Show)

 Honda Motor Co., Ltd. plans to sell 1.03 million vehicles on retail basis (990,000 units on wholesale basis) in the fiscal year ending March 31, 2015 (FY 2014). Honda's unit sales in Japan increased steadily from 600,000 units in FY 2011 to 717,000 units in FY 2012 and 848,000 units in FY 2013. Contributors to the constant growth are the N-series of mini vehicles that were launched in December 2011 and the Fit series that were launched in September 2013. As a result, Honda today has a market share of 14.9% in Japan, including mini vehicles.

 Honda is making extensive efforts to strengthen its business in Japan to increase its sales. In addition to launching new models with greater market appeal, Honda is introducing organizational changes. Honda established the regional headquarters in Japan. Honda's operations in Japan will focus on developing and spreading its cutting-edge technologies, shifting from volume production. Honda also restructured sales network by increasing "Small Stores" and "Sedan Stores." With these initiatives, Honda aspires to maintain annual production at one million units in Japan.


Related report: Honda releases medium-term strategy "The all-new Fit to be developed in six regions" (posted in December 2012)



New mini and compact vehicles become best-selling cars by model

 Honda is launching new models, one after another, in the mini vehicle and compact car categories that form the core of sales in Japan. The N-BOX, the first of Honda's N-series mini vehicles, proved to be the best-selling cars by model in FY 2012 and FY 2013 for two years in a row. In November 2013, Honda launched the wagon-type N-WGN, the fourth model of the N-series.

 As for the non-mini vehicles, the all-new Fit was launched in September 2013. It became the best-selling non-mini vehicle by model in the second half of the FY 2013. Then, the Fit-based VEZEL SUV was launched in December 2013 of the same year. The company plans to launch a new sedan in the summer of 2014.

 (Note) Vehicles with an overall length of up to 3.4 meters, width of up to 1.48 meters, and height of up to 2 meters that are powered by engines with total displacement of less than 660cc are classified as "mini vehicles" under the Japanese vehicle regulations, and are eligible for preferential taxation. Because of the affordable prices and maintenance costs, mini vehicles today account for nearly 40 % of all automobile sales in Japan. This report collectively refers to small, midsize and large size vehicles other than the mini vehicles as non-mini vehicles.

Honda's model launches in Japan between 2013 and 2015

Timing Model Description
June 2013 Accord  The Accord Hybrid with the JC08 mode fuel efficiency of 30.0km/liter and the Accord Plug-in Hybrid with the JC08 mode combined PHV fuel efficiency of 70.4km/liter were launched.
September 2013 Fit  The all-new Fit and the Fit Hybrid were developed concurrently in six global regions: Japan, China, Asia and Pacific, North America, South America, and Europe. The hybrid model accounted for 70% of orders received in Japan in the first month of launch.
November 2013 Odyssey  The fifth-generation Odyssey has the interior height of 132.5cm, which is 10.5cm higher than the previous model. The floor level is lowered without changing the overall vehicle height of the previous model. The Odyssey has a starting price of JPY 2.49 million including tax. The Absolute version is fitted with a 2400cc direct-injection petrol engine. The monthly sales target is set at 4,000 units.
November 2013 N-WGN  The fourth model of the N-series was released for sale in the wagon-type mini vehicle category. The wagon-type mini vehicles with height between 1,550mm and 1,700mm account for over 40% of the Japanese mini vehicle market. The front-wheel drive version has the JC08 fuel efficiency of 29.2km/liter. The monthly sales target is set at 12,000 units.
December 2013 Vezel  A sports utility vehicle based on the new Fit. The VEZEL is fitted with a 1500cc direct-injection gasoline engine (with a starting price of JPY 1.87 million including tax) or the combination of the same engine and a hybrid system (with a starting price of JPY 2.19 million). The hybrid version accounted for 82% of the orders received as of 40 days after release. The VEZEL was developed concurrently in six global regions as was the Fit.
Summer 2014 Compact sedan
(Note 2)
 The sedan, based on the new Fit, is said to be named the Brillia. It was supposed to be launched this spring but was postponed to this summer because of faults with the Fit Hybrid.
By March 2015  In addition to the Fit-based sedan mentioned above, Honda will launch an N-BOX derivative mini vehicle, and the all-new models of the STEP WGN, Stream and Legend by March 2015. Honda will launch the next model of the Fit Shuttle early in 2015.
Source: Nikkan Jidosha Shimbun Newspaper Apr. 25, 2014.
(Notes) 1. The prices are those at market release and include a 5% consumption tax.
2. The new Fit-based sedan was released in January 2014 in India and Thailand under the name of the City as before.
Lineup of the N-series mini vehicles from first to fourth models
1st  The N-BOX, a wagon-type mini vehicle with the height of 1,780mm or 1,800mm was launched in December 2011.
2nd  The N-BOX+ (plus) was launched in July 2012 with the "multi-space system" and other features addressing greater convenience.
3rd  The N-ONE was launched in November 2012 with a distinct style based on the design of the N360, Honda's very first mini vehicle.
4th  The N-WGN was launched in the wagon-type mini vehicle category with the height of 1,655mm or 1,675mm in November 2013.

 

Mini vehicle unit sales by model ( 5 best-selling models in FY 2013 and Honda N-ONE and N-WGN)

FY 2011 FY 2012 FY 2013
rank Unit sales rank Unit sales rank Unit sales
Honda N-BOX 10 47,329 1 236,287 1 225,900
Daihatsu Move 3 144,398 5 160,397 2 193,670
Daihatsu Tanto 4 139,322 4 162,782 3 180,588
Suzuki Wagon R 1 174,226 2 199,122 4 180,029
Daihatsu Mira 2 171,301 3 190,490 5 164,027
Honda N-ONE not available 8 55,309 9 82,791
Honda N-WGN not available not available 10 72,548

Source: Japan Light Motor Vehicle and Motorcycle Association

 

Non-mini vehicle unit sales by model ( 3 best-selling models in FY 2013)

FY2011 FY2012 FY2013
rank Unit sales rank Unit sales rank Unit sales
Toyota Aqua 8 64,953 1 282,660 1 259,686
Toyota Prius 1 310,484 2 280,929 2 251,915
Honda Fit 2 234,432 3 170,099 3 217,100

Source: Japan Automobile Dealers Association
(Note) The all-new Fit was launched in September 2013. As far as the second half of the FY 2013 (October 2013 to March 2014) is concerned, the Fit was the best-selling model with 149,182 units sold. The Toyota Aqua was the second best-selling model with 131,693 units sold.

 

 



Aspiring to sell 1.03 million units in Japan in FY 2014

 Honda's mini vehicle sales marked record high for two years in a row at 362,000 units in FY 2012 and 434,000 units in FY 2013. As a result, Honda's market share in the mini vehicle category rose sharply from 9.8% in FY 2011 to 19.2% in FY 2013.

Honda’s non-mini vehicle unit sales in FY 2013 were 414,000 units. It is expected to increase further in FY 2014 when the Fit series will have a full-year effect in boosting the sales. The Fit is currently produced at the Yorii Plant and the Suzuka Plant. The company plans to produce the Fit at the Sayama Plant as well starting in about June to shorten the long delivery time which has been caused by the strong sales of the model. The Fit will be eventually produced at all of Honda’s three assembly plants in Japan.

 As for unit sales in Japan in FY 2014, Honda expects that it will increase by 21.4% from 848,000 units in FY 2013 to 1.03 million units in FY 2014 despite the consumption tax hike which became effective on 1st April 2014. The optimistic forecast is based on the unfilled orders for the recent new models and the launch of six all-new models in FY 2014.

Honda's sales in Japan

FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014
Plan
Non-mini 391,037 503,841 454,270 434,918 354,453 414,034 -
Mini 189,109 158,429 154,210 165,666 362,344 434,345 -
Mini's ratio 32.6% 23.9% 25.3% 27.6% 50.6% 51.2% -
Total 580,146 662,270 608,480 600,584 716,797 848,379 1,030,000
Source: Honda's monthly release on production, sales and export
(Notes) 1. Honda's unit sales in Japan in FY 2013 rose from 333,632 units in April through September 2013 to 514,747 units in October through March 2014. Partly due to the pre-tax hike rush demand, Honda's domestic sale momentum for the full year has risen to the 1 million units mark.
2. The wholesale outlook in Japan for FY 2014 ("Honda Group Unit Sales"), announced as part of Honda's financial statements, is set at 990,000 units.

 

Honda's production in Japan and export from Japan

FY2008 FY2009 FY2010 FY2011 FY2012 FY2013
Production in Japan 1,148,361 901,775 912,307 870,455 876,039 936,879
Export from Japan 573,561 230,010 310,254 253,060 163,324 97,311
Export/production 49.9% 25.5% 34.0% 29.1% 18.6% 10.4%
Source: Honda's monthly release on production, sales and export
(Note)  Honda started production at the new plant in Mexico in February 2014. The plant has annual capacity to produce 200,000 units of the North American versions of the Fit and the VEZEL. This will boost Honda's production capacity in North America to 1.92 million units and reduce export from Japan.

 

 



Enhancing Japanese sales network with "Small Store" dealerships

 In March 2006, Honda's three then-existing sales channels for Japan, namely Primo, Clio and Verno, were integrated into a single channel. All of Honda vehicles are sold today in the Honda channel carrying the trade name of Honda Cars. To coincide with the launch of the new mini vehicle, the N-BOX, Honda opened and is now increasing the number of "Small Stores" that mainly sell mini vehicles and compact cars while maintaining the extensive lineup principle. In addition, Honda is now opening "Sedan Stores" in urban areas to mark the launches of mid- or larger-size sedans including the Accord and Legend.

Opening "Small Stores" and "Sedan Stores"

"Small Stores"  Honda announced the concept of "Small Stores" inviting dealership proprietors to join the new network. The "Small Store" network started in December 2011 when the N-BOX was launched. The "Small Stores" sell primarily mini vehicles and compact cars and are characterized by friendly, welcoming atmosphere and facilities that attract especially women. Various types of mini vehicles and compact cars are on display and available for test driving.
 There are 320 "Small Store" dealerships as of early 2014. Honda plans to designate more dealerships especially in areas with a higher sales proportion of mini vehicles and compact cars. Honda plans to open some 420 "Small Stores" that will account for approximately 20% of all Honda Cars dealerships in Japan.
"Sedan Stores"
(see Note)
 Honda is designating "Sedan Store" dealerships to coincide with the launch of all-new large-sized vehicles, especially sedans, such as the new Accord launched in June 2013 and the new Legend to be launched in 2014. The "Sedan Stores" will focus on selling sedans. Various sedans are on display and available for test driving at the dealerships. The dealerships will also offer services that will satisfy customers including the appraisal of trade-in cars. It is said that Honda will designate some 150 “Sedan Stores” primarily in large cities in Japan.
Prefectural business promotion division  Starting in April 2014 and after a trial period of nearly a year, Honda is establishing "prefectural business promotion divisions" in consolidated sales companies in eleven prefectures including Tokyo, Aichi and Hiroshima. The divisions work closely with the companies' sales force in defining and meeting local needs that vary among different prefectures. The divisions respect the sales companies' approaches and initiatives that are suggested by sales companies rather than following the car manufacturer's policies.
 Starting in April, Honda kicked off a trial project in eleven additional prefectures including Osaka and Fukuoka. Ensuring full understanding of the project among those concerned, Honda will have "prefectural business promotion division" established in all prefectures. The plan will be completed in three years if all goes as anticipated.

Source: Nikkan Jidosha Shimbun Newspaper: Jun. 22, 2013./Feb., 27, Apr. 1, Apr. 5, 2014.
(Note) The Accord hybrid and plug-in hybrid that were released in June 2013 sold 9,884 units from July through December 2013, ten times more from the same period a year earlier. The Accord outnumbered the Toyota Camry, a hybrid-only model similar to the Accord, which sold 5,113 units during the same period. The Accord (3,650 units sold) again outnumbered the Camry (2,766 units sold) during the first three months of 2014.

 

 



Yorii Plant to spread Honda's cutting-edge technologies worldwide

 The Yorii Plant of Honda's Saitama Factory began production of the Freed in July 2013 and the Fit and the Fit Hybrid in November of the same year. The plant integrates Honda's most advanced production technologies in the stamping, welding, painting and assembling processes. As Honda's "mother plant", the Yorii Plant will lead Honda's other plants in the world. Production technologies developed at the plant are spread to other plants including the new plant in Mexico that began production in February 2014.

Role of Yorii Plant

Production models  The plant produces the Fit and the Fit-based SUV (Vezel) and a sedan. They share the same platform to increase the ratio of common parts and gain more competitive edge. The plant has annual capacity of 250,000 units.
Objectives, mission  The plant specializes in producing the Fit-class Global Compact cars to seek the highest possible efficiency. Honda will also roll out the technologies and know-how developed at the Yorii Plant to other plants outside Japan to gain more competitive edge in a global scene.
 Honda plans to increase its global sales by 2 million units from 4 million units in FY 2012 to 6 million units in FY 2016. Small-sized models will account for 80 to 90% of the additional quantity. Honda is currently building ten new plants around the world and nine of them will produce small-sized vehicles.
Background  The Yorii Plant was conceived as the plant for producing the luxury model, Acura, in 2006. The Acura sales were expected to soar in North American markets and the Acura was supposed to be introduced in Japan as well. However, the plant construction work was suspended due to the Lehman Brothers financial crisis. The original plan was reconsidered and the construction work resumed to make it the plant for producing small-sized vehicles.
New technologies adopted at Yorii Plant
Stamping  Normally two stamping lines are installed at a plant with annual capacity of 250,000 units. The Yorii Plant has four high-speed servo stamping machines that are connected by a single high-speed carrier to move the stamping parts. As a result, the plant has a daily capacity of producing enough parts for 1,050 vehicles (250,000 units annually) per line.
Welding  The production equipment has been reduced in weight and size to reduce the overall plant cost. This initiative will be implemented at other plants globally. For instance, the conventional large sliding jigs of the main body assembling equipment are replaced by smaller robot jigs. The smaller jigs can be combined in any layout for standard use in other plants around the world.
Automated assembly  Nine assembling processes have been automated to reduce heavy-lifting work, to increase the accuracy of fixture and to reduce the manpower. Specifically, the automated assembly highly improved efficiency in processing the instrument panel, glass, engine suspensions and tires.
Painting  The conventional 4-coat 3-bake solvent painting process (using thinner, etc.) has been replaced by a 3-coat 2-bake aqueous coating process. The use of the highly functional paint has enabled elimination of the middle coat and reduced coating energy by as much as 40%.
Synthetic resin  The bumper painting process adopts Japan’s first technology to remove paint mist by using calcium carbonate as absorptive material. This reduces the energy consumed by air conditioning normally required for mist removal.
Leased work space Suppliers assemble their parts at the leased work space (collectively called “corporate park”) at the Yorii Plant. This contributes to increasing the transportation efficiency and reducing the CO2 emissions.

 

Operations in Japan to develop core technologies for vehicle development

 Honda has over 10,000 engineers in Japan and they will play the role of a technical leader in Honda's vehicle development especially in such areas as driving and environmental technologies. According to Honda, Japanese operations will focus on developing and spreading innovative technologies, shifting from volume production.

 Honda has been developing mini vehicles that are packed with high performance features. The company intends to adopt those technologies in compact vehicles that will be developed for emerging markets in the future.

 

 



Establishing regional headquarters in Japan

 Honda established the"regional headquarters in Japan" as of April 1, 2014. Honda's global strategies used to be formulated by concerned divisions in Japan and its business in Japan was conducted by them as part of the global plan. This means there was no organization that oversees strategies exclusive for the Japanese market. To end the shortcoming, a decision was made to distinguish business in Japan from the company's global business operations. This allows strengthening business in Japan while helping the global division to concentrate on defining and executing global strategies.

Regional headquarters in Japan established to control business operations in Japan

Control over domestic business operations  The regional headquarters in Japan was established to integrate domestic production, quality control, purchasing, sales and other functions. This will allow faster decision making, ensure more accurate profit and loss management, and help establish profitable operations in case of medium-term decline in demand in Japan. The majority of employees at Honda Motor Co., Ltd. will belong to the regional headquarters in Japan.
 Honda is working under "global operation reform" in which the world is divided into six regions: Japan, China, Asia and Pacific, North America, South America, and Europe. Each region is responsible for product planning, development, production and sales. The objectives of the reform are launching locally-optimized models efficiently and expanding sales.
 Regional headquarters have been established already in five regions outside Japan. As one of the six regional headquarters, the regional headquarters in Japan will reduce exports and aims to “sell out locally-built vehicles in Japan.” As a result, the ratio of export to the production in Japan decreased from about 50% in FY 2007 to 2008 to only 10.4% (97,000 units) in FY 2013.
Enhancing global functions  The global division will be separated from business operations in Japan. It will concentrate on formulating and executing worldwide strategies.

Source: Honda's press release Feb. 24, 2014, Nihon Keizai Newspaper Feb. 24, 2014.

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