In Brazil, most Honda motorcycles come customized with big tires that keep large-framed riders carrying gas canisters and other heavy loads from getting stuck in the pothole-filled roads.
Attention to local needs like these has helped give Honda a market share that leaves other motorcycle manufacturers in the dust.
Honda enjoys an overwhelming share of Brazil's market for motorcycles and other motorized two-wheeled vehicles, where it sells 80 percent of all new units. Yamaha Motor Co. is a distant second in Brazil with only a 10 percent market share.
Honda sold 1.63 million motorcycles in Brazil in 2011, four times as many as in the entire Japanese market.
The company's dominance is also helped by extensive on-site production and by utilizing a unique payment system in Brazil capable of withstanding economic headwinds.
Honda began making motorcycles in the Amazonian city of Manaus in 1976. With no local parts makers at the time, Honda would have had to pay heavy transportation costs and taxes to import them from Japan. So the company found ways to use locally available materials to make everything from seats to wheels on its own and hold down costs.
Even now many of the parts are made at the Manaus factory--three times what Honda's factories in Japan produce for themselves and more than any of the automaker's other factories around the world.
President Issao Mizoguchi, the head of Honda's subsidiary making and selling motorcycles in Brazil and the first local hire for the position, said, "When you want to eat Japanese sushi in Brazil, it's too expensive if all the ingredients are imported. That's the same reason why Honda uses local materials."
Honda is also helped by a unique way some products are sold in Brazil.
Although financial institutions are making it harder to qualify for loans as the economy slows down, Leandro Cristiano Lopes, who manages motorcycle dealers in the Sao Paulo area, said, "We have the 'consorcio,' so that helps."
A consorcio, related to the English word "consortium," is a joint purchasing mechanism similar to a mutual financing association. These organizations are tightly regulated by the Brazilian government. Honda has its own dedicated consorcio, which accounts for more than 30 percent of its motorcycle sales in the country.
Here is a basic rundown of how a consorcio works. For motorcycles paid for in 48 monthly installments, the financial company presiding over the arrangement will recruit 96 people (twice the number of payments) who want to purchase a vehicle. The company gives participants two vehicles a month. One recipient is selected at random, while the other is the person who pays the highest number of installments in advance. This allows some lucky participants to get their motorcycle before making all 48 payments, and the consorcio lets people unable to obtain a loan from a financial institution because of low income or large debts purchase big ticket items.
Consorcios also helped keep sales brisk during the late 1980s, when the rate of inflation exceeded 1,000 percent.
"It's a way to give customers the products they want," Mizoguchi said. "It provides some stability even when the economic situation is in flux."
- « Prev
- Next »