Honda, "defeated"

Honda lost in electrification? And that's certainly not the whole story. Younger people certainly cater to some markets, but it also makes the original upgrade market for Honda customers with high user satisfaction, and more importantly, the possibility of pilots PK Highlander models can not be introduced into the Chinese market, and the superposition of these reasons will lead to Honda's embarrassment today.

Text/Daily Capital

In 2023, the Japanese "god car" Honda slammed on the brakes.

On December 2, Honda Motor said it would lay off about 900 contract workers at its Chinese joint venture, Guangqi Honda, due to a rapid shift to the electric vehicle market, which will significantly reduce the proportion of gasoline-powered vehicle sales. The proportion of layoffs is about 7% of Guangqi Honda's workforce (approximately 13,000).

The layoffs are the first official layoffs for Honda since 1998, when it began producing cars in a joint venture with GAC. According to official data, Guangqi Honda's sales in the first 10 months of 2023 totaled about 490,000 units, a year-on-year decrease of 18.5%.

Guangqi Honda said that Guangqi Honda did not lay off employees, but only terminated the agreement of the labor dispatch company, and provided economic compensation to the labor dispatch personnel in a timely manner in accordance with laws and regulations. The phased personnel adjustment of the corresponding production will not have an impact on Guangqi Honda's production line, as well as on the new energy and intelligent strategy.

Despite this, Honda's rapid decline in the Chinese market is an indisputable fact.

According to Honda's data, Honda's cumulative terminal sales in China in 2021 were 1,561,540 units, of which Guangqi Honda Automobile Co., Ltd. sold 768,268 units and Dongfeng Honda Motor Co., Ltd. sold 793,272 units.

From January ~ December 2022, Honda's cumulative sales of terminal vehicles in China were 1,373,122 units. Guangqi Honda Automobile Co., Ltd. sold 720,716 units and Dongfeng Honda Automobile Co., Ltd. sold 652,406 units. From January to September 2023, Honda's total sales of terminal vehicles in China reached 831,305 units.

Simply looking at the data level, it is easy to conclude that Honda's sales in China have been declining for the past three years.

More importantly, in 2023, China's mid-size car market will show a growth trend, with the cumulative retail sales of the domestic mid-size car market reaching 2.183 million units from January to September, a year-on-year increase of 14.8%. However, the cumulative sales of the Honda Accord, which has been the perennial champion of mid-size car sales, were 120,061 units from January to September this year, a year-on-year decrease of 25.5%, and sales fell by a quarter.

There is also the CRV, which used to be hot in the SUV market, and its sales from January to September 2023 will be 128,365 units, a year-on-year decrease of 22.5%, ranking only eighth, according to the data of the Passenger Association.

As we all know, these two cars are Honda's "god cars" in the Chinese market, and they are the leading models in the sedan and SUV markets respectively, and now they have declined sharply, does it mean that Honda is really going to lose in the Chinese market?

Although there is no final answer yet, the decline of Honda is an indisputable fact. As for Honda's experience, some market participants and some media blamed the rapid development of electric vehicles in China, while Japanese cars did not pay attention to it. There has been a serious strategic deviation between the two sides, and Japan is focusing on hydrogen energy, so most of the products launched in the past two years are mainly fuel vehicles and hybrid vehicles.

That's right, that's certainly one of the reasons. According to the latest data from the Passenger Association, in October this year, the wholesale market share of independent brands reached 60.1%, and the market share of joint venture brands has fallen below 4%. In 2021, the market share of independent brands is still 41.2%, less than two years have passed.

But, is that all? Apparently not. As far as Honda is concerned, "Daily Capital" believes that it has lost to itself and its attitude towards the Chinese market.

Once upon a time, any of Honda's cars, such as the Fit, Civic, Accord and CRV, have attracted great attention from consumers in the Chinese market, and have all of them dominated the first place in the sales list. But I have to say that after the concept of "buy a car and get an engine" is deeply rooted in the hearts of the people, especially when good models and good technologies are not put on the Chinese market, Honda seems to be more and more confident in itself.

Yes, that's how the Chinese auto market has been taken over in the past few decades. Let's talk about Accord first, Chinese's familiarity with Accord should start from the seventh and eighth generations. To be fair, the eighth-generation Accord is a classic in the Accord series. Although the Accord reduced the allocation to hit the price below 180,000 yuan, which was regarded as an astonishing move at the time, this did not affect its positioning as a business sedan, which was highly sought after by consumers.

But by the time of the 10th generation Accord, it has become younger across the board, although sales are still high, and most consumers are young users. The problem is that Honda's mature 2.0T+10AT classic power in overseas markets is not used, and with a 1.5T engine, it is inevitable that there will be a suspicion of a small horse-drawn cart.

The core is that the Accord has captured young people, but it has not allowed Honda to have depth in the field of mid-to-high-end sedans. For example, there is A8 after A6 for upgraded customers. After the price dropped, young people like it, but they love it quickly, and they change cars quickly.

What's more critical is that the original Honda owners actually trust Honda, and most of them will grow older, and the consumption of cars will also be upgraded, but Honda has no product depth, which is equivalent to giving up this market of more than 300,000 yuan. Therefore, looking back now, how to play with youth is also a question that Honda needs to think about.

Let's talk about Honda's other god car, the CRV. This car has undoubtedly become the dream of many Chinese for a time, and it is a benchmark for compact SUVs. But the car has gone through several generations, and overall, not much has changed. Insert a sentence, this does not talk about the history of Dongfeng Honda and Guangqi Honda, as well as Honda's planning thoughts on these two car companies.

When Honda wanted to use the Costa crossover to raise the SUV figure, it found that there were very few people who paid the bill. Eventually, it was withdrawn after 6 years of listing. Later, Honda launched the Crown Road, which corresponds to Dongfeng Honda's URV. This car once made the market full of expectations for it, the price is moderate, the space is large, and it is said to be the quietest model in the Honda series. However, after the launch, the 1.5T engine oil of this car increased, the oil emulsification phenomenon and the problem of small fuel tank discouraged some consumers.

It must be mentioned that the Chinese SUV market is hot, and Honda has a "pilot" 7-seater SUV in the overseas market, and the price is about 200,000 yuan, but it has not been able to introduce it to China. There are comments on the Internet that Honda is worried about the impact on the crown road and CRV, so it has delayed the introduction.

There is a detail to be aware of. Over the past decade or so, Great Wall has thrived with SUVs. Imagine, if Honda can use the pilot as an iterative product after the CRV fire to enter the medium and large SUV market, it may be the second spring of Honda's SUV market in China. Looking at the many netizens on the Internet asking Honda in various forums when Honda will introduce pilots to China, you know that this car definitely has the potential to sell well and even kill the Toyota Highlander.

Unfortunately, this voice may not have reached Honda's decision-making level, or Honda's decision-making level is so stubborn that it can be eaten in the Chinese market by relying on the original product. I don't have to speculate much about the reason, but the result is that this car has not yet entered the Chinese market.

To put it simply, Honda wants to make a comeback in the Chinese market. The first step is to keep up with the pulse of the development of China's auto market and follow the trend. When the age of electric vehicles arrives, it is obviously not advisable to go your own way or run wild on another track. Failures in strategic directions are often fatal.

Second, fuel vehicles are still a huge market. In the first half of 2023, the cumulative sales of automobiles will reach 9.54 million units, and although the cumulative sales of fuel vehicles will still be as high as 6.582 million units, although the number of fuel vehicles will decrease by 6.47% year-on-year. For Honda, if it wants to continue to make money in the Chinese market, it must come up with products that truly win the love of consumers. This product includes details such as model changes, technology changes, and synchronization between the Chinese market and overseas markets.

There is also the issue of quality. Since 2014, Honda has suffered a series of recalls due to problems with components such as airbags, sliding doors, and engines, which has severely damaged its position as the benchmark for the best quality and efficiency, and the quality crisis is also hitting profits.

In 2019, a Reuters report said that quality issues had caused operating margins in Honda's global automotive business to drop to 2%-3%, with Honda having less room to maneuver at a time when larger competitors were forging alliance partnerships and overhauling the business to strengthen itself.

However, in general, if the Honda car can be maintained normally, the failure rate is still very low, just look at so many Japanese car consumers. However, it is also an indisputable fact that the allocation of Japanese cars has been reduced, and the related engines and technologies have not been introduced to the Chinese market in sync. These have been reported, so I won't repeat them.

Finally, I have to remind you that no matter what the product, if it loses the trust of consumers, it will become worthless.

[The article is for communication purposes only, not investment advice, please be aware of investment risks.] It's not easy to code words, if your phone still has power, please help like and forward. Thank you very much]