We’ve all been amazed by Honda’s ability to adhere to quality standards and still manage a competitive price point. The question is, how have they managed to keep margins low while delivering high value?
Reliability
Even the most reliable brands cannot expect to keep a car on the road for ever, but Honda’s average customer retention is a respectable 7.5 years. This is based on an internal survey of 25,000+ customers and has been an annual event for several years.
The results are surprisingly uniform across all models and age groups i.e. current owners are keeping their cars longer than previous ones, regardless of purchase date. Honda have worked hard to change the image associated with their brand, seeing it more as a necessity than just another purchase decision.
Costs
The costs of used honda in fresno are low by almost any measure; their operational costs are around 10% of their sales, which is about one fifth of the average cost for the Japanese industry as a whole.
The reason for this is a low cost base, which translates into low labor and overhead costs, with manufacturing flexible enough to absorb any fluctuations in production or sales volume. For example, Honda will suspend production during periods of high demand or prolonged lockouts at their plants.
Learning Curve
As mentioned earlier, Honda have invested heavily in research and development so they have a very long product life cycle with common architectures that enable them to quickly refresh existing models while simultaneously introducing new technology into the market.
This approach has paid off huge dividends, with Honda having a market share of more than 50% in Japan, the largest car market in the world.
Import tariffs
Honda’s products enjoy a preferential tariff rate of 8% in the UK, which is one of the lowest import duties in Europe. This puts them on an even footing with the leading European brands, who have had very little impact on Honda sales in the UK despite their higher prices and much vaunted reputation.
Low-cost Production
Hondas are manufactured all around the world through a network of independent local plants in order to meet regional demand. Plants are also located in India to benefit from the lower manufacturing costs of this country. Honda are able to keep their factories in Japan lean and mean by using robot automation for much of the production process without sacrificing quality or effectiveness.