Posted by: David Welch on June 4, 2008
I think Sun Tzu said, in his tome “The Art of War” that a leader is judged not on his victories, but the battles he chooses not to fight. Or something like that. Credit Honda with heeding that advice. While rivals Toyota and Nissan chased Detroit’s Three down the trail of suv lucre, Honda stuck to what it does best. It makes mostly passenger cars and smaller suvs with great engines and—with a few exceptions—very good fuel economy. They didn’t plow cash into truck frames, V-8 engines or factories that can only make gas hogs. And as I recall, they were derided for not chasing sales growth with a real pickup truck. Sure, they went after pickup buyers with a half-baked Ridgeline, but now the short shrift investment looks smart.
Honda isn’t closing truck plants like GM, nor trying to convert a factory to make something else like Nissan. Toyota has slowed its truck and suv plants in Indiana and Texas and may also find other cars to build on those assembly lines. Honda has a plant making Pilot suvs and the Odyssey minivan, and it has likely slowed down given sales, but the company isn’t tied into building pickups and suvs that just aren’t moving. Knowing Honda, they could even build something smaller at that plant if the company felt they needed to bring in something smaller.
Here’s where Honda really gets the dividends. Since the company never made gas hogs, and it has invested money and resources to make its Civic the best compact in class, the company now has a brand image that is synonymous with small cars. And in May, the Civic topped the list. The Civic beat the Ford F-150 pickup in sales for the first time ever. Actually, the Civic also beat out the Toyota Camry. The company is winning because of what it can make, and because of what it chose not to build.