A little over three decades ago, a song titled Turning Japanese by the English new wave band The Vapors was a big pop music hit. And right about then, U.S. car buyers began “turning Japanese” — increasingly embracing smaller, fuel-efficient vehicles produced by Japanese manufacturers Nissan (PINK:NSANY), Toyota (NYSE:TM), and of course, Honda (NYSE:HMC). In the succeeding decades, Honda has, you might say, changed the lyrics of that classic song as it has been “turning American.”
Honda was the first of the Japanese car giants to build cars in the U.S., and the company has become dependent on the auto-hungry U.S. market. Indeed, even as rival automakers such as Ford Motor Co. (NYSE:F), General Motors (NYSE:GM) and Volkswagen (PINK:VLKAY) focus their expansion efforts on the burgeoning China market, Honda has chosen to embrace the U.S. to revitalize overall sales. It has also tapped key North American and even non-Japanese personnel to head up the effort.
This week, the company said North American Chief Operating Officer Tetsuo Iwamura will become executive vice president beginning April 1. Iwamura will be second only to President Takanobu Ito in Honda’s corporate pecking order. Moreover, Iwamura is going to head a new seven-member board that will manage activities from product planning to production to sales in North America.
And for the first time, three of those board members — R&D leader Erik Berkman, sales executive John Mendel, and production executive Tom Shoupe — are U.S. natives. Also for the first time, Honda’s No. 2 executive will be based at the company’s U.S. headquarters in Torrance, California, instead of Tokyo.
The move by Honda to “turn American” even more than it had in the past is clearly a move to focus on its most important market, the U.S. This focus may have come later than it should have, but better late than never.
Honda’s revenue from sales of autos, motorcycles and power products in North America came in at $12.7 billion for quarter ended Dec. 31, and this accounted for 51% of Honda’s global total, so you see just how significant U.S. sales are to the Japanese behemoth.
In 2011, Honda’s U.S. car and light truck sales actually slid 6.8%. That was partly due to production disruptions caused by natural disasters in Japan and Thailand, but the company also suffered from lukewarm reception of its redesigned Civic.
Honda wants to correct this sales downtrend in 2012, and it has set a lofty goal of increasing U.S. sales by 24%. The company is off to a good start toward that achieving that goal since sales have surged 11% through the first two months of the year.
At the time of publication, Jim Woods held no positions in any of the stocks mentioned here.