Honda

• 1. Introduction

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  Honda has built and sold more of one machine, the Super Cub, than any maker has ever sold of any other motor vehicle. The Japanese company has been the world's largest motorcycle manufacturer since 1959. Its motorcycle production reached 500 million by May 2025. It also produces more than 14 million internal combustion engines every year, more than anyone else when counted by units. In 2013 it spent about 5.7 percent of its revenue, some 6.8 billion US dollars, on research and development. Yet this is also a company that has nearly been swallowed by a rival, walked away from the sport that made its name, and reported its first full-year loss in 2026. So how did a postwar start-up become a maker of everything from lawn equipment to luxury cars? Why did a firm famous for engines resist building one particular kind? And what happens when a company that prides itself on being first bets heavily on a future that arrives more slowly than expected?

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• 2. Piston Rings and Ruins

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  Soichiro Honda, born in 1906, began as a mechanic at a garage called Art Shokai, where he tuned cars and entered them in races. In 1937 an acquaintance named Kato Shichiro financed his first company, Tokai Seiki, which made piston rings out of that same garage. The early results were poor. Tokai Seiki won a contract to supply Toyota, then lost it because the rings did not meet the standard. Honda had attended engineering school without graduating. He toured factories across Japan to learn how Toyota controlled quality, using a method known as the five whys. By 1941 he could mass-produce acceptable rings with an automated process that even unskilled wartime laborers could run.

  The war changed the company's ownership. Tokai Seiki came under the Ministry of Commerce and Industry, renamed the Ministry of Munitions after 1943. Toyota took a 40 percent stake, and Honda was demoted from president to senior managing director. He also helped other firms automate the making of military aircraft propellers. The relationships he built with people at Toyota, at Nakajima Aircraft Company and in the Imperial Japanese Navy would prove instrumental after the war.

  In 1944 a US B-29 bomber attack destroyed the Yamashita plant. On the 13th of January 1945, the Mikawa earthquake brought down the Itawa plant. After the war Honda sold the salvageable remains to Toyota for 450,000 yen. With that money he founded the Honda Technical Research Institute in October 1946.

  The institute began with twelve men working in a shack of just 16 square metres. They bought a stock of 500 surplus Tohatsu radio generator engines, two-stroke units of 50 cc, and fitted them to bicycles. When the supply ran out, Honda built his own copy of the engine. Customers nicknamed the result the Bata Bata, after the noise it made. In 1949 the institute was liquidated for 1,000,000 yen, and that sum was used to incorporate Honda Motor Co., Ltd.

  Around the same time Honda hired the engineer Kihachiro Kawashima and also Takeo Fujisawa. Fujisawa supplied the business and marketing skill that matched Honda's technical instincts. The two men stepped down together in October 1973. Meanwhile the 1949 D-Type became the first complete motorcycle with frame and engine both made by Honda, and the first to carry the name Dream.

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• 3. The Nicest People

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  "You meet the nicest people on a Honda" was the slogan Honda carried to America during the 1960s. The company worked with the advertising agency Grey Advertising. At the time, many Americans pictured motorcyclists as tough, antisocial rebels. The campaign instead suggested that Honda machines were made for ordinary people. The ads ran for three years, and by the end of 1963 alone Honda had sold 90,000 motorcycles.

  Business schools still use this market entry as a teaching case for introductory strategy. Scholars have argued about why it worked, and three explanations stand out.

  In 1975 the Boston Consulting Group was commissioned by the UK government to explain how Japanese makers had out-competed the British motorcycle industry. Its report concluded that firms like Honda aimed for very high volumes, which gave them economies of scale and learning curve effects. It blamed British managers for not investing enough to profit from the same effects.

  Richard Pascale reached a different view in 1984 after interviewing the Honda executives who had run the American launch. He found a story of "miscalculation, serendipity, and organizational learning" rather than a grand plan. Honda's first intention was to sell large motorcycles of around 300 cc. Those bikes suffered performance and reliability problems on the long distances of American highways. Meanwhile the team's own small scooters, used to get around their base in San Francisco, attracted interest from passers-by. So the company fell back on selling the Super Cub.

  Gary Hamel and C. K. Prahalad offered a third reading in 1989, using Honda to illustrate their idea of core competencies. In their account, Honda's strength was leadership in internal combustion engine technology. The high power-to-weight engines built for its racing bikes passed their expertise into mopeds.

  The Super Cub's lineage stretched far beyond America. In 2017 India became Honda's largest motorcycle market, where the company holds a 59 percent share of scooters.

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• 4. Racing Obsession

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  In 1959 Honda entered five motorcycles in the Isle of Man TT, the most prestigious motorcycle race in the world. Soichiro Honda had raced himself and could not stay away from international competition. His engines were powerful from the start, but it took until 1961 to tune the chassis well enough to win. That year Mike Hailwood claimed Honda's first Grand Prix victories, in the 125 and 250 cc classes. Hailwood later took its first Senior TT wins in 1966 and 1967. The race bikes had exotic layouts, including a 125 cc machine with five cylinders that turned at 22,000 rpm.

  In 1979 Honda came back to Grand Prix racing with the NR500, a four-stroke with a monocoque frame. Rules limited engines to four cylinders, so Honda gave each cylinder a non-circular, race-track shape with eight valves and two connecting rods. The aim was enough valve area to challenge the dominant two-strokes. The experiment failed. For 1982 Honda built its first two-stroke racer, the NS500, and Freddie Spencer won the company's first 500 cc world championship on it. Riders such as Mick Doohan and Valentino Rossi later added many more titles. At the Isle of Man, Honda holds the record for most wins, with 227 across the solo classes and Sidecar TT. That total includes Ian Hutchinson's clean sweep of the 2010 races.

  Four wheels came quickly. In 1964, just a year after starting road car production, Honda entered Formula One with its own engine and chassis. Victory came at the 1965 Mexican Grand Prix, and another at the 1967 Italian Grand Prix. After the 1968 season it withdrew, then returned in 1983 as an engine supplier. Between 1986 and 1991 Honda engines won five consecutive Drivers' Championships, with Nelson Piquet, Ayrton Senna and Alain Prost. They also won six Constructors' titles with Williams and McLaren. Senna said Honda played a pivotal role in his three world championships, and called it "the greatest company in the world."

  From 2000 to 2008 Honda was back as an engine maker and later as a team owner, earning 17 podiums and one win. It returned in 2015 as a power unit supplier and struggled at first. By 2019 it was winning again, and in 2021 Max Verstappen took the Drivers' Championship with Red Bull Racing on Honda power. Honda then formally left to put its resources into carbon neutral technologies, though it kept supplying Red Bull until 2025. It has announced that it will rejoin as a works team in 2026, supplying Aston Martin.

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• 5. Doing Things Differently

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  In August 1963 Honda put its first production car on sale, the T360 mini pick-up truck. Its small 356 cc four-cylinder engine placed it in the cheaper Kei car tax bracket. In October of the same year came the S500 sports car, whose chain-driven rear wheels betrayed the company's motorcycle roots. Honda's first four-door sedan was not the Accord. It was the air-cooled 1969 Honda 1300.

  The Civic appeared in 1972 and replaced the N600, a version of the Kei car N360 adapted for international sale. In North America only the Toyota Corolla, introduced in 1966, has had a longer unbroken run among Japanese nameplates. In 2006 the redesigned Civic won Motor Trend's Car of the Year. The same magazine named the Ridgeline, Honda's first pickup, Truck of the Year, a rare double.

  Honda entered car making in the late 1960s, after Toyota and Nissan had been building cars since before World War II. It chose to do things a little differently. The Accord and Civic have always been front-wheel drive, a tradition that held even when the 1993-97 Passport, part of an exchange program with Isuzu, did not follow it. In the early 1980s Honda added anti-lock brakes, speed-sensitive power steering and multi-port fuel injection, first as options and later as standard.

  The same urge to go first produced Acura in March 1986, the first dedicated luxury brand from a Japanese automaker. Then came the 1991 NSX, the first all-aluminum monocoque vehicle with a mid-mounted V6, and the first to carry the variable valve timing Honda calls VTEC.

  One engine layout never reached Honda's passenger vehicles. In the late 1990s American dealers pressed hard for a V8 for top-end SUVs and Acuras. American Honda reportedly sent one dealer a shipment of V8 vegetable juice to quiet him. Honda weighed a V8 again in the mid-2000s for bigger Acura sedans and a new NSX, but cancelled the project in late 2008, citing environmental and economic conditions.

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• 6. Suitors and Rivals

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  In 1992 and 1993, Japanese media reported that Honda faced a serious risk of a hostile takeover by Mitsubishi Motors. Mitsubishi was larger by volume and flush with profits from its Pajero and Diamante models. Honda was vulnerable. Soichiro Honda had died in 1991, and in 1990 Tadashi Kume had been succeeded as CEO by Nobuhiko Kawamoto.

  Kawamoto was chosen over Shoichiro Irimajiri, who had overseen the creation of Honda of America Manufacturing, Inc. in Marysville, Ohio. The two shared a friendly rivalry, but health problems led Irimajiri to resign in 1992. Without him, Honda was outpaced in product development by other Japanese automakers. It was also caught off-guard by the truck and sport utility vehicle boom of the 1990s.

  Kawamoto moved fast to change the culture. He pushed market-driven development that produced the first-generation Odyssey and the CR-V. He also steered the company away from many sedans and coupes that engineers loved but buyers did not. His most shocking decision was to end Honda's successful Formula One program after the 1992 season. He cited costs under the Mitsubishi threat and a wish for a more environmentally friendly image.

  The pressure returned in a different form on the 23rd of December 2024, when Honda announced a memorandum of understanding to merge with Nissan. The combined group would have been the third largest automaker by sales. Mitsubishi Motors, in which Nissan holds 24 percent, agreed to join the talks, with a deadline of 2026. In February 2025 the boards voted to end the talks. Nissan reportedly backed out after growing differences, including Honda's proposal that Nissan become its subsidiary.

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• 7. Cleaner Engines

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  In late 1999 Honda launched the Insight, the first commercial hybrid electric car sold in the US, one month before the Toyota Prius. It sold at first for about US$20,000. Its highway rating from the EPA was 70 mpg, making it the most fuel-efficient mass-produced car of its time. Global sales of that first generation amounted to only around 18,000. Still, Honda's cumulative hybrid sales passed 1 million at the end of September 2012. By June 2014 they stood above 1.35 million.

  The Civic GX, first offered in 1998, ran only on compressed natural gas. In 2001 the EPA rated it the cleanest-burning internal combustion engine in the world. Honda announced in June 2015 that it would phase out natural-gas vehicles, having sold about 16,000 since 2008, mostly to taxi and commercial fleets.

  Brazil took a different path. Honda's Brazilian subsidiary launched flexible-fuel Civic and Fit models in late 2006, and by 2008 it sold 93,361 of them. By early 2009 all of its Brazilian car production was flexible-fuel. In March 2009 it introduced what it called the world's first flex-fuel motorcycle, the CG 150 Titan Mix.

  On the 16th of June 2008, in Takanezawa, Japan, Honda built the first assembly-line FCX Clarity, a hydrogen fuel cell car whose only by-products were heat and water. Hydrogen stations were the obstacle. California's air regulator granted 6.8 million dollars for four stations, costing 1.7 million dollars each. Honda saw fuel cells, not battery cars, as the long-term replacement for piston cars.

  Honda's electric record is mixed. The EV Plus of 1997 offered a 100-mile range, but only around 276 units were sold in the US. In April 2022 Honda and General Motors announced a joint venture for low-cost electric vehicles. By October 2023 it was cancelled because demand was slower than expected. In October 2022 Honda also announced Sony Honda Mobility, which planned to release its first cars under the Afeela brand in the US in 2026.

  In March 2026 Honda said it expected to book up to 15.7 billion dollars in expenses and losses from rethinking its electric vehicle strategy. In May 2026 it reported a net loss of 423.9 billion yen for the fiscal year ending March 2026, its first full-year loss. The company cancelled the 0 Saloon, 0 SUV and Acura RSX, and turned its focus toward hybrids.

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• 8. Robots, Jets and Rockets

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  Standing 130 centimetres tall and weighing 54 kilograms, ASIMO resembles a small astronaut wearing a backpack. Released in 2000, it was the eleventh robot in a line that began with the Honda E0 in 1986. It can walk at up to 6 km/h and is described as the only humanoid robot able to climb and descend stairs on its own. Stairs are hard, though, and ASIMO has taken two plunges off a staircase. In 2010 Honda built a helmet with brainwave and blood-flow sensors, so a user could move ASIMO simply by thinking of a gesture.

  The company reached into the sky as well. GE Honda Aero Engines was set up in 2004. Honda Aircraft Company was established in 2006 as a wholly owned subsidiary to build the HondaJet. The HA-420 entered production in 2012, and customers received their first deliveries in December 2015. Honda says its design reduces drag and improves fuel efficiency.

  Smaller machines are part of the story too. Power equipment began in 1953 with the H-type engine, before Honda built any motorcycles, and sales peaked at 6.4 million units in 2007. In September 2023 Honda stopped selling gasoline lawn mowers in the US. The RN-01 downhill racing bicycle, which is not for sale, replaced the usual derailleur with a gearbox. Greg Minnaar rode it for Team G Cross Honda.

  Honda began developing rocket engines in 2019. In June 2025 it carried out a launch and landing test of a reusable launch vehicle at Taiki, Hokkaido. The company has said it aims to make a sub-orbital spaceflight in 2029.

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