Honda crunches the gears

Honda is at a crossroads, having lost its UK general manager of cars Ewan Ramsay after less than two years in the role (MW last week). His departure is the latest in a series of high-profile senior management changes at the Japanese car marque, which until recently was seen as the standout client advertiser in the UK.

Many believe Honda’s award-winning advertising has faltered over the past year, with sources pointing to increased “interference” in the marketing strategy from Europe and Japan as a possible reason. Critically acclaimed ads such as “Cog” and “Grrr” have been replaced by activity designed to “push [the] metal” produced at its Swindon plant and increase sales, according to one source close to the company.

The changes come at a time when Honda’s flagship marketing platform, its Formula One racing team, is struggling competitively and for column inches – amid the sport’s most exciting (and potentially lucrative from a brand perspective) season in years.

Ramsay is understood to have been unhappy in his role as general manager, having joined the company at the start of last year to oversee the day-to-day running of the car division (MW November 17, 2005).

Soon after Ramsay joined, high-profile marketing director Simon Thompson left to join first Motorola and then Lastminute.com. His replacement Jeff Dodds spent less than a year in the role, meaning Honda is now on its third marketing chief in 18 months in Tom Gardner, who was previously head of aftersales. Marketing communications manager Matt Coombe, who was another key figure behind the award-winning ads, also left at the end of last year to join Vodafone (MW October 12, 2006).

Ramsay has been replaced by head of sales Bernard Bradley, who has sales and marketing experience at Volkswagen and Volvo.

Despite the management merry-go-round, Honda’s sales figures remain healthy. The latest figures from the Society of Motor Manufacturers and Traders show that Honda is making ground on rival Toyota – proof, say some, that the new focus is paying dividends.

In the year to the end of September, Honda had sold 87,587 vehicles in the UK, up 8% on the previous year, giving it a 4.5% market share. The boost has also been helped by the new UK-produced CR-V and Civic models introduced in the past year. Toyota also increased its share, to 5.2%, having increased sales by 3.1% on last year – less dramatic than Honda, but up on the 2% industry average.

Some had questioned whether Ramsay’s arrival triggered the spate of departures, particularly Thompson’s, but one executive close to the company says that was not the case. “Ramsay is a very talented, likeable man,” says the source. “He is strategic and should have been good for Honda, but he was never given the chance to deliver the strategy. He wasn’t given the chance to do the role that he was employed to do – and that’s a real opportunity missed.”

Thompson says it was “time to move on” after 15 years with the company, while Dodds – a golf fanatic – landed his “dream” job at Callaway Golf.

Nonetheless, change is unsettling and another source points to a disgruntled dealer network: “The shame for Honda is that, for whatever reason, a lot of senior management have moved on. It takes dealers a long time to trust senior management staff and they are having to keep building those relationships over and over again – not ideal when you need to capitalise on sales.”

Chris Wood, chairman of branding consultancy Corporate Edge, agrees. “It is massively unsettling for any brand to go through the personnel changes that Honda has,” he says. Wood believes that the management changes are all the more unsettling because Honda has such a strong company philosophy. He also thinks the upheaval could have an effect on its advertising.

Honda was the darling client of the advertising industry with ads such as Cog, which was created by Wieden & Kennedy and broke in 2003, and showed a chain reaction involving 85 car parts. Follow-ups “Grrr”, “Impossible Dream” and “Choir” also collected a host of awards.

But the focus has now shifted from esoteric brand-building to more product-focused spots, and far greater emphasis on digital, through its “Hondamentalism” strategy.

According to one insider, the move demonstrates how the UK business is changing and how, despite a strong set of sales figures for September and the year to date, it is becoming more an adjunct of a pan-European focus.
The source says: “It has got to the stage where it is struggling in terms of hitting sales to match its ambitious targets and objectives, and the UK business has been allowed less freedom creatively. It is commercially focused now, not on brand or marketing. After Impossible Dream, the focus has been shifting away from communications and much more towards the numbers.”

He adds that the UK has been paying the price for a weak European market, which has led to the “relentless” churning out of cars.

Meanwhile, Honda dealers have long been arguing for more product-based marketing, which Wood believes is necessary. He says the ads may have helped it reverse an image that Honda produced cars for old people, but that they had not necessarily improved sales.

“I just wonder whether the consumer at large pays as much attention to the ads as the advertising world,” he says. “It doesn’t surprise me that they have moved to a harder-nosed form of advertising.”

Yet Mike Moran, founder of motoring consultancy The Automotive Partnership, thinks Honda’s “great” products as well as “sustained” marketing will see it through. “Honda has improved the brand’s position in the UK,” says the former Toyota commercial director, although he calls some of its advertising “creative indulgence”. Moran adds: “It has made a point of targeting Toyota and is definitely making inroads.”

Perhaps so, argues Wood, but Toyota is consistent in its brand values and communications, plugging away at the UK market in a steady way.

“Honda has always been more particular, less bland than Toyota, which has been consistently more successful,” adds Wood. “Toyota does a steady, competent job while Honda tends to zig-zag. Toyota more or less does everything right. Other companies just get some things right, others less right and some things wrong and that hampers their growth.

“Honda gets some things very right, others wrong. It swings between high drama, blanded out by a pan-European or Japanese approach. It needs to find a happy medium.”

The Honda brand is certainly changing gear – the UK advertising community is hoping it is not into reverse.