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NEW YORK - In 1973, the local newspaper in Akron, Ohio, sent a photographer to Rick Case’s filling station to take pictures of his signs bearing gas prices. The Middle East oil embargo was in full swing. Gas prices were around 30 cents a gallon and rising fast.

Case also owned the Honda dealership next-door. Before the photographer arrived, he changed the signs to read 99 cents — as high as the displays would go back then.

Case was on to something. A confluence of political and market forces gave Honda Motor Co. its big break in the U.S. in the ’70s. Consumers who were suddenly worried about gas prices snapped up fuel-efficient small cars like the Civic that Case and a handful of other Honda dealers were selling. The Japanese automaker has found success by offering Americans affordable, reliable gas-sippers ever since.

“I was really hanging my hat on Honda, and I’m glad I did,” said Case, who now owns several Honda and other dealerships in Ohio, Florida and Georgia. “The gas thing really helped get them attention.”

Honda marked its 50th anniversary in the U.S. Thursday, and new challenges confront the automaker. It will have to mount a stout defense of its turf as gas prices rise again, fuel-economy rules tighten and the market for small cars grows out of the wreckage of the Detroit Three.

“The industry is coming around to where Honda is, where (its) strengths are right now,” said Jeff Schuster, executive director of vehicle forecasting for J.D. Power & Associates. “So they face a tougher competitive landscape.”

Soaring gas prices
Japanese engineer Soichiro Honda founded Honda Motor Co. in Tokyo just three years after World War II as a manufacturer of small motorcycles. The company established American Honda Motor Co. in 1959, signed up a handful of dealers and began importing small bikes like the Honda 50 to the U.S.

The company’s first import car was the two-door N600, which sported a two-cylinder engine and a sticker price of $1,295.

Honda’s big break came with the oil embargo, which sent the price of gasoline soaring. Fuel-efficient cars from companies like Honda suddenly looked a lot more appealing to American consumers.

Between 1973 and 1976, sales of the compact Civic more than quadrupled to 132,286, and they continued climbing for another three years. By the end of the decade, Honda had opened its first U.S. plant in Marysville, Ohio, and others sprung up across Ohio, Alabama and Mexico to build products from motorcycles to lawnmowers.

Meanwhile, a relentless focus on quality control “created a contrast with where American cars were going,” said Fred Notehelfer, a professor specializing in modern Japanese history at the University of California at Los Angeles. American cars at the time, he said, “were often flashy but falling apart very quickly. … Japanese cars, especially Hondas, would keep running.”

Honda reaped the benefits of a second energy crisis last year, when an oil bubble pushed gas prices above $4 a gallon. As Detroit and its SUV-heavy lineups suffered, Civic sales in the U.S. climbed to a record 339,289.

Honda’s overall U.S. sales, however, declined 8 percent as the economy soured. The downturn accelerated and sales kept falling. The company has fought back by slashing production and offering buyouts and sweetened retirement packages to its employees.

Muscling in on Honda’s turf
The turmoil wracking the auto industry presents a paradox for Honda. On the one hand, Honda has weathered the crisis because it hasn’t depended on once-profitable gas-thirsty vehicles as much as its Detroit rivals. On the other hand, its competitors now have little choice but to muscle in on Honda’s turf.

Last month, the Obama administration laid out stricter fuel-economy rules for the auto industry, raising fleetwide average efficiency to 35.5 mpg by 2016. That’s likely to benefit Honda, which already has a sturdy lineup of fuel-efficient cars like the Fit, the Civic and the Insight hybrid. But it also means it will have to confront new competitors armed with a wider lineup of fuel-efficient cars.

“Everybody is moving kind of at warp speed toward the position to where Honda is right now,” J.D. Power’s Schuster said.

On Wednesday, Italian automaker Fiat Group SpA sealed a deal to buy the bulk of Chrysler LLC. The Auburn Hills, Mich., company is now poised to introduce new small cars to the U.S. like the two-door Fiat 500, along with vehicles branded under the sporty Alfa Romeo brand.

Chrysler’s crosstown rivals have small-car plans, too. General Motors Corp., which is also operating under bankruptcy protection, plans to start building the subcompact Chevrolet Cruze next year and says it will get about 40 miles per gallon. GM will also start selling the Chevrolet Spark minicar in the U.S. in 2011.

Meanwhile, Ford Motor Co. is bringing its popular subcompact Fiesta to the U.S. from Europe next year, and Toyota Motor Corp. is working to bring a new car to the U.S. modeled after its iQ microcar.

Honda also plans of electrify its fleet. The company, which just relaunched its Insight hybrid as a cheaper alternative to the Toyota Prius, plans to sell a hybrid based on its sporty CR-Z concept sometime in 2010. It will also offer a hybrid version of the Fit subcompact and is planning a new version of its Civic hybrid.

John Mendel, executive vice president for sales at American Honda, said the company already competes with small-car makers in Europe and plans to succeed in the U.S. by sticking to its strengths.

“We face those challenges globally now,” he said. “That’s not to diminish, certainly, the competition we see coming with a stronger, restructured GM or Chrysler or Ford.”

Source (article): MSNBC

Source (pictures): JAPANCLASSICCARGALLERY

NEW YORK - A new offering from Honda Motor Co. may get dogs more interested in checking out the inside of their ride rather than hanging their heads out the window.

The Japanese automaker showed off a “Dog Friendly” version of the Honda Element SUV at the New York International Auto Show on Thursday. The concept features a cushioned pet bed with safety restraints in the cargo area, a spill-resistant water bowl, and even a ventilation fan to keep canines comfortable. A folding ramp gives animals an easy way to get in and out.

In the back seat, there’s an integrated pet carrier and machine-washable seat covers to make it convenient and safe to carry smaller pets. The rubber floor mats feature a toy-bone pattern, and paw-print emblems on the side and back of the vehicle draw attention to its pet-friendly status.

Honda says it’s still finalizing the features, but the Dog Friendly Element will be available this fall.

“Pets have become more like family, more important to households than ever before,” said James Jenkins, a senior product planner for Honda. “We felt this was the perfect vehicle to offer such dog-friendly features.”

The Element already is appealing to pet owners because of features such as its easy-to-clean flooring in the cargo area and its wide doors.

Honda showed an interest in pets through the “Wonderful Openhearted Wagon” concept the company unveiled in 2005. That demonstration model included pet-friendly materials, a place for small animals to ride right up front, and a larger pet carrier that popped up from the floor in the back seat. Pet owners quickly started clamoring for Honda to put the features into production, Jenkins said.

The new Element may help Honda find a powerful niche market to revive sales of the Element, which are down 61 percent in the first three months of this year.

It’s no secret that pet owners are willing to open their pocketbooks to pamper their pooches. There are about 75 million dogs in the U.S., and the market for pet products and services totaled more than $43 billion last year, according to the American Pet Products Manufacturers Association.

Pricing for the Dog Friendly Element hasn’t been disclosed, but standard versions of the vehicle start around $21,000, including destination charges.

Source (article): MSNBC

Source (picture): NYTIMES