Weaknesses
1. Product recalls. Over 2011 and 2012, Honda recalled more than 1,000,000 vehicles to fix various faulty parts and manufacturing defects. Car recalls severely damages firms brand reputation and future sales.
2. Weak position in Europe automotive market. Honda holds a very weak position in the Europe’s automotive market and has maintained only 1.1% market share in 2012. Although, Europe’s market share is declining at the moment and many companies experience losses, the market is huge and firms can benefit from the economies of scale.
3. Decreasing sales. In 2012, Honda’s revenue hit the lowest point in 4 years to ¥7.948 trillion. Honda sales were down by 11.2% in North America, which represents more than 40% of total Honda revenues. Revenue from Asia and Europe also declined by 21.3%, 15.5% respectively, signaling poor firm’s performance globally.
4. Cost structure of Honda is high as compare to other automobile manufacturers
5. Caters to only the upper middle segment which limits the customer base
6. Honda has to recall a few of their models for corrective measures which caused a lot of hue and cry