PESTLE Analysis of Honda
Honda is a Japanese automotive manufacturing company in the world. In 1946, Takeo Fujisawa and Soichiro Honda established this company. In this article, we are going to do the PESTLE Analysis of Honda for academic purposes. Currently, it is headquartered in Minato, Tokyo, Japan. Honda is a leading motorcycle and automotive manufacturing company with a strong global presence. It operates in more than 150 countries. More than 215650 employees are working under this company and successfully managing the operations globally. Apart from motorcycles and automotive, the company is also a leading name in manufacturing internal combustion engines. Since 1959, the company has sold nearly 400 million motorcycles. The product portfolio of Honda is really vast and robust as they manufacture commercial vehicles, automobiles, robotics, motorcycles, scooters, jet engines, jet aircraft, thin-film solar cells, outboard motors, or you name it. They also manufacture electric generators and home gardening equipment.
The automotive industry is really competitive. The main rivals of Honda are Toyota, Hyundai, Tata Motors, BMW, Volkswagen, Porsche, Ford, Mercedes, Audi, and so on. In this PESTLE analysis of Honda, we will study some crucial factors like political, economic, social, technological, legal, and environmental that affect the company’s business on an international level.
Here is the complete PESTLE analysis of Honda:
Political Factors – PESTLE Analysis of Honda
Many international companies hire lobbyists to serve the brand or company. But, Honda does not have any lobbyists because the brand is very popular in every corner of the world and significantly influences governments. As a multinational automotive company, the company is operating all over the world by following the laws and rules of different countries. On the other hand, the company can take advantage of lower taxation in India and Africa for its growth.
Clash with China:
China is the world’s biggest consumer market right now, and the clash between these two countries can hurt the revenue and profit of Honda. As we mentioned above, Honda is a Japanese company, so it does not have friendly relations with China. Moreover, several countries have increased their tax rate and tariffs due to the conflict with China.
Environmental sustainability and clean energy is putting pressure on companies and governments. The main purpose of manufacturing electric cars is to reduce pollution or emissions. Due to this reason, the trend of electric vehicles is growing rapidly. This is the hot topic right now after the popularity of Tesla. Also, the company has introduced several models of hybrid vehicles and trying its best to manufacture electric cars.
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Economic Factors – PESTLE Analysis of Honda
Gross Domestic Product (GDP):
In 2020, the annual revenue of Honda was 122 billion dollars, and it has decreased by 13.7 percent. The main reason for this decline is Covid-19 and the current economic recession. That is why its net profitability and annual revenue have dropped during the last two years.
Honda’s offerings are totally different in both luxury and economic markets. In Pakistani and Indian markets, the main popularity of Honda is because of its high-quality motorcycles. When it comes to cars, people think it is a luxury brand. This kind of market perception is creating problems for Honda in these markets. Due to the current economic conditions, Honda should offer good products.
With such a vast global presence and strong portfolio, Honda is considered the most reliable brand globally. But, the pandemic, travel restrictions, shutdowns, and lockdowns have negatively impacted the brand, and its net income, sales, and revenue are decreased. But, the company is trying to reduce its unnecessary expenses in order to minimize the losses. Honda is also planning to reduce its operational as well as manufacturing costs to provide cost-effective products to customers.
Social Factors – PESTLE Analysis of Honda
While buying a car from any brand, a customer looks for specific features in the vehicle. Maybe it is fuel efficiency, comfort, price, or convenience. This little thing can impact the performance and growth of the company at a high level. It is hard to fulfill every customer’s demand, but by focusing on essential features, Honda can make its customers happy.
The trend of Electric Cars:
In the sub-continent, Honda is known for its motorcycles. But in developing countries, people are shifting towards eco-friendly vehicles like electric cars. Just to fulfill the demand of these customers, Honda has launched electric scooters and planning to manufacture electric vehicles in the future. It will help the company to attract more customers from different markets who are eco-conscious. These electric scooters and cars would be great for users and society.
Some people, countries, or regions do not prefer imported services and items. Due to this purpose, Honda manufactures those products made with indigenous workforce and material. Honda uses the English language in all English-speaking regions to reduce the language obstacles.
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Technological Factors – PESTLE Analysis of Honda
It is hard to stay up-to-date because technology is growing daily. But, Honda is investing a considerable sum of money to stay up-to-date with the latest technology. Recently, Honda has updated and installed v-tech engines and GPS, respectively. This kind of up-gradation will take the company to new heights and help to reduce its carbon emission footprint.
In manufacturing electric scooters, the company has utilized innovative technology. It was a mixture of various latest technologies, and the main purpose of using these technologies is to manufacture better quality products for the consumers. According to a report, Honda employs more than 60 percent clean energy in the production of its products.
Legal Factors – PESTLE Analysis of Honda
Being a global brand, the company tackles different legal issues over various problems in other countries. For example, many countries are endorsing the use of electric and hybrid cars, but they haven’t cleared any rules or regulations regarding electric vehicles so far.
In order to reduce the litigation cost, the company should enhance the quality of its products, such as cars. Recently, Honda recalled more than 50000 motorcycles due to faulty brakes. Such problems can damage the image of the company. Also, the brand should focus on the prices of products in order to avoid any legality.
Environmental Factors – PESTLE Analysis of Honda
The company is taking various steps and initiatives to promote environmental sustainability. By the end of 2050, the company will reduce its carbon emission to half. It is only possible when the company manufacture more electric and hybrid vehicles. It would help the company to minimize its carbon emission.
Conclusion – PESTLE Analysis of Honda
After this in-depth PESTLE analysis of Honda, we have determined that Honda has so many growth chances. The company should take a competitive advantage over competitors by making electric cars and motorcycles.
Honda can create a strong global image by handling environmental, legal, and other sensitive issues. Honda should resolve problems before they could affect the company’s revenue and profit.
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