Honda has a new TV ad. Called Keep Up, it champions the company’s commitment to innovation. It’s typical of Honda’s TV spots – arresting and engaging. But it also encapsulates the problem at the core of the business. Honda makes some brilliant, technically advanced cars. But it makes some very dowdy ones and those are the ones it sells – in dramatically falling numbers.
Honda doesn’t seem to know what it is. And if you don’t know what you are you can’t know how to market yourself. You could argue that Honda doesn’t truly have a brand. And this is a huge problem – because today’s car market is all about brand. Nobody makes a truly bad car any more: a Skoda is a VW is an Audi. So brand is the differentiator.
In recent years Audi, BMW and Mercedes have invaded mainstream territory with smaller, more everyday products, and ultra-low interest rates mean almost anyone can now get into one of their cars. At the same time the ‘value’ brands like Hyundai and Kia have marched into the mainstream. The result? A very squeezed middle.
So life has become extremely hard for the likes of Ford, Opel/Vauxhall, Renault, PSA Peugeot-Citroen and the Japanese carmakers. But where the European brands are rethinking their relevance, the Japanese – with the exception of the now half-French Nissan – are not. Honda in particular.
Which is odd, because it’s Honda which has the heritage and the soul to register with customers. There was the tiny but brilliant S600 sports car and the Z microcar. There were the rising-sun liveried F1 cars and world championships for Ayrton Senna and Alain Prost. There was the NSX – a non-vulgar supercar – and the screaming S2000 roadster. There was the pioneering of variable valve timing, hybrids and now hydrogen fuel cells. There was Asimo the robot, and even a new kind of business jet.
And yet customers carried on buying run-of-the-mill Civics and perhaps a lawn mower. The engineering wasn’t working. If it was part of the brand it was a part which didn’t matter to the people actually buying the cars.
The result? A nose-dive in sales since the premium brands re-shaped the landscape. Honda now has a market share in Europe of just 1.0%. That’s behind Suzuki and only just ahead of Mitsubishi. Like Toyota and Nissan, Honda has a European factory, yet it has just a quarter of their shares. And it has been trampled by new brands like Hyundai and Kia, which together have almost six times Honda’s share. Something has gone very badly wrong.
A lack of diesels – ironic for a business with engines at its heart – and a strategic cut in R&D spend following the 2008 crash have hit Honda hard. But the problem is more fundamental than that.
Honda will say that it’s about to reborn, with a stream of new product. This week at the Geneva motor show it will have a new high-performance Civic, a new-generation hybrid NSX supercar (effectively a Porsche 918 for not much more than 10% of the cost), a production version of its fuel-cell vehicle, a new Jazz supermini and a new HR-V small SUV. But it’s only the latter two which compete in volume segments of the market.
And the design of the Jazz and the HR-V, like the Civic Tourer, is ungainly, clumsy and dated. That won’t matter to the typical Honda customer, but Honda needs new customers. And new customers will not be persuaded by product like this. Design is now a prime brand communicator. In the years since Honda’s R&D cut consumers have become much more design-literate – the advent of the iPhone saw to that – and car companies have become much bolder.
To be successful today a car company needs a strong, clearly articulated brand. But the brand has to be underpinned by the product – cars which people want. Only then will the engineering credentials and brand messaging count. If the product’s not right the messaging has nothing to adhere to.
So the advertising, like the engineering, currently exists in isolation. It’s great. It wins awards. But it won’t sell cars. Sadly, for business with such a pedigree, it’s Honda which hasn’t kept up.