Honda designs competing division, US-style
Come the spring of 1986, Japan's ambitious Honda carmaker launches an all-new car and a new car division. Honda, in effect, is following the example of the American car companies by generating a rivalry between car divisions within the corporation. Thus, its cars will not only compete for the consumer sales dollar, but the two divisions will vie among themselves for corporate prestige and money, people, and ideas.
Nissan, Japan's No. 2 carmaker, has tossed the idea around, but nothing has come of it up to now. ''Obviously, there's been a lot of talk about it,'' declares Chuck King, executive vice-president of Nissan Motor Corporation in the United States. ''I think with the voluntary export restraints, however, it's more of just a thinking process than an in-depth study program.''
(No. 3 Mazda, which is 25 percent owned by Ford, announced last week it would begin producing autos in 1987 at a Flat Rock, Mich., facility formerly owned by Ford. It joins Toyota and Honda, which already operate US plants.)
Honda's plan will give it the kind of in-house rivalry that the car divisions at General Motors and Ford have long had.
''Internally, we'll be very competitive, one division against the other, from the design of the cars right down to the wholesaling of them to the dealers,'' explains Cliff Schmillen, executive vice-president of American Honda Motor Company.
Enter the Acura (AK-oora), a new Honda division that is going after the car buyer who, having outgrown a Prelude or Accord, now moves into an Audi or BMW, perhaps, or a sporty car built in Detroit.
''An Accord owner,'' says Mr. Schmillen, ''will now have something to move up to at Honda.'' Besides, he adds: ''We need to be bigger in order to continue to be competitive. We need to get more hands into the pie.''
In describing the plan, Schmillen says that the Acura division will sell its own brand-name cars through an entirely new network of car dealerships and have all new personnel at the company's headquarters here on the West Coast. To start out, only one car will be introduced, followed by a succession of vehicles in the years ahead. The cars will be larger, sportier, more luxurious, more expensive, and a little higher tech than the Honda.
At the end of the first year Schmillen says he expects to have more than 100 Acura dealers nationwide and sell about 40,000 cars, a minuscule figure compared with the more than half-million Hondas a year the company now sells in the US. But as car shipments from Japan increase, the company will expand its dealer total. Ultimately, it expects to have from 500 to 600 Acura dealers, compared with 1,000 Honda dealers at the most.
Schmillen denies any wariness about launching the new division, saying that ''we're in a much better position now than BMW was 20 years ago.'' Honda now builds motorcycles and two- and four-door Accords at its assembly plant in Marysville, Ohio.
Engines are the secret of the company's rapid success in the world, first in motorcycles and then in cars, versatile off-road vehicles, and consumer products. When Honda sprang its revolutionary low-emission, high-mileage CVCC engine on the world in 1972, it stood the rest of the auto industry on its ear. The engine made its American debut in 1974. By 1977 Honda was selling a half million cars a year in the United States alone.
Schmillen says Honda will introduce a four-wheel-drive wagon in April which will be similar to the Toyota Tercel. There are no plans for a convertible for the US, he adds, even though the company sells an open-top City car in Japan. Beyond that, Schmillen says, ''I've wanted a minivan for the last 10 years, but we have no place in which to build it.'' Honda is running at capacity in both Japan and the US.
''We're out of space in Japan, and it's almost impossible to build there because of land and building costs,'' Schmillen adds, ''so if Honda is going to expand, it will have to be in other parts of the world, including the US.'' The company now is thinking about an automobile engine plant in Ohio with the decision due in the next 12 months. Motorcycle engines are now produced in Ohio.