Honda in Europe -- Case - Financial Information and Overall Business Performance

HONDA IN EUROPE -- Case Update

Financial Information and Overall Business Performance

In 2011, Honda had a weak performance in Europe comparing to its company’s business in other regions. The firm’s automobile division in Europe has lost 20.5% of the unit sales, with a total of 23.2% decrease in its sales revenues (in U.S. dollars). In addition, during 2010, the total demand of Honda’s automobile products in Europe has declined for approximately 5%. Despite of the launch of the CR-Z model in Europe, Honda’s sales still remain unsatisfactory in the region because of the decline in consumer confidence due to the more stringent credit policies, the slump in the retail sales market, the increased competition in the automobile industry, the termination of sales support policies in some countries and the weakness in consumer spending trends due to the recent unfavorable market conditions (global financial crisis, sovereign debt crisis, etc.).

External and Internal Environment Analysis

During the past four years, while its competitors gradually strengthen their positions in the European automobile industry, Honda’s market share in Europe has dropped from 1.80% in 2008 to 1.10% in 2011, showing a strong signal of the company’s lack of attention and organizational problems in its European markets.

Most recently, Honda’s European manufacturing operations have been affected by the Thailand severe flooding, which reduced its product supplies in the European markets.*1 Also, Honda has planned to interrupt the production of some parts for its vehicle models at its U.K. manufacturer HUM. This action will result a temporary decrease of the car supplies in the Europe market.

In 2011, Jean-Marc Streng was appointed as the Head of European sales for Honda Motor Group. He planned to release more new product models in Europe and strengthen the

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