Honda UK boss: why lower volumes are key to brand's future

When its new e:Ny1, ZR-V and CR-V crossovers go on sale later this year, Honda will have one of the newest fleets of any mass-market manufacturer in the UK, and the firm is tipped to quickly start building its EV portfolio out into more crucial market segments in a bid to keep pace with fast-electrifying rivals. However, Honda’s targets in the UK centre on profit, rather than volume, and passenger car boss Rebecca Adamson has no plans to take the fight to best-sellers Volkswagen and Ford, or to chase the lofty six-figure volumes that Honda achieved at its peak here in 2007. Speaking to Autocar at the Japanese brand’s most important unveiling event in years, she explained why it’s in good shape as it settles into its new positioning and embraces electrification. How is Honda performing in the UK? “We have over the last few years made a profit in the UK automobile business, which hadn’t happened for at least a decade. And that’s important for our sustainability and survival into the future. “We took some decisions around volume back in 2016/ 2017, so our focus is very much not market share, and we took a decision to focus primarily on retail. Today, our split is 88% retail, with 12% going into fleet channels like Motability. So from a volume perspective, we have over the last couple of years sat at around about 25,000. We think probably the optimum volume is somewhere between 35,000 and 50,000.” Can Honda meet the 22% EV sales mix that the UK will mandate from 2024? “Absolutely. That’s a categoric decision. And from a volume perspective, I would much rather be looking at that situation: 22% of 35,000 units, as 22% of 100,000 units is a hell of a challenge.” Does Honda still have a Jazz-led image as a pensioner-friendly brand? “Absolutely, and very proudly. However, there’s more than just the Jazz in the line-up. If you drive down the road and look at Honda CR-V drivers, you will see families in that vehicle, and the same for the HR-V. “I think the Jazz is such an iconic brand within the UK. And yes, our customer base is a little bit older, but ironically, over a long period of time, that age has come down very, very slightly. The point being that as people evolve through their life cycles, they find a car in the Honda range that suits them.” Has inflation helped you bring your pricing mix up? “I think there’s a number of factors at play, and inflation doesn’t just affect the sale price – it clearly affects the production and the cost of building anything, not just cars. If you factor in all of the impacts we’ve seen over the last three years, in terms of raw materials, cost of energy and logistics and availability of logistics, we’ve seen pretty much the cost of everything increase. And yes, that has been reflected in the vehicles. "I think what's also worth considering is that the industry as a whole is making billions – whether it's pounds, yen or euros – of investment in delivering zero-emission vehicles. And we obviously take our business as a whole and whilst we're losing huge amounts in that arena that we won't see a return on for a long, long time, we've got to have a focus on making sure we've got a sustainable, viable business for the future, which means we do have to focus on profit, ultimately - we are a business." What drives Honda’s strong residual values? “Our decision not to be in corporate and not to engage in, let’s call it ‘aggressive competitive pricing’, builds the value not just for us but also for our customers. There’s no distress with our products in the marketplace. We set our volumes around the realistic retail sales for the vehicles It’s not that we’re pushing them into the market but that there’s a demand for that car with our customer base. "The other thing is that we're very much focused on value and customer experience, and I don't just mean with the product; our retail network consistently wins awards for its level of service and quality of service, and that word 'trust' is really important for us in terms of our products and our retailers. I think it will be increasingly important when you start to look at new technologies like electric vehicles, and the fact that there is going to have to be a really rapid acceptance from consumers." Will the electric e:Ny1 be a big conquest car for owners of the near-identical HR-V hybrid? “I think there’s a place for both. Interestingly, if you look at the conquest [from other brands] on the Jazz at launch, it jumped straight to 40%. We’re consistently seeing a high level of conquest on every new product launch. We’re averaging about 40%, which is actually new for us.” Would you restrict imports to protect residuals and your positioning as a non-volume brand? "Arguably we already do. We plan our volume based around what we believe that demand will be, through predominantly retail channels. That doesn't mean we're ignoring fleet and that we won't sell into those channels - we absolutely will. What we won't do, and frankly can't afford to do, is to compete heavily in the corporate channels to push volume. "We need a sustainable and viable business - for us but also for customers to make sure they can rely on having that service and support out there as well."