Establishing Belgium Honda / 1963

Crossing Boundaries to International Production

Establishing Belgium Honda / 1963

EEC: Leaping the Hurdle into Europe

By June 1961, sales of motorcycles by American Honda Motor (American Honda) were registering some momentum. At about this time, Honda established a wholly owned sales company, European Honda GmbH (European Honda, presently Honda Motor Europe (North) GmbH) in Hamburg, Germany (then West Germany), in order to expand its exports overseas. Just as it had done in the U.S., Honda took up the challenge of opening a European motorcycle market.

EEC: Leaping the Hurdle into Europe

Building the factory. The construction was rapid from the start, but nevertheless was suspended for four months after a cold wave struck the region.

Ironically, that month Honda swept the top five spots in the 250 cc and 125 cc classes at the Isle of Man TT racing event in the U.K. It was only the third year that Honda had participated in the event. Honda was indeed making a name for itself throughout Europe and the U.K.

In fact, Honda was at the time the world's leading maker in terms of motorcycle production and exports, and the Honda bikes were making a mark on the racing circuits with outstanding performances in the British Isles. Therefore, if Honda could succeed in the establishment of a European market - already a major one, with annual demand exceeding two million units - it seemed the day would soon come for the company to be recognized as the world's number one motorcycle manufacturer, with the reputation and sales figures to match.

European nations, however, had lately been implementing severely restrictive importation policies in order to protect their domestic industries. Therefore, it was clear that limits on imports and high tariffs would make it hard for Honda to win in this critical market.

It all began when six European countries-West Germany, France, Italy and the three Benelux*1 countries-made the move toward enhanced economic unity. In January 1958, the European Economic Community (EEC) was established (the predecessor of today's European Union, the EU). The leading nations of Western Europe sought greater force in competing with two giant political and industrial powerhouses, the U.S. and the Soviet Union.

The EEC countries were planning to establish a common EEC market by the end of 1969, in which they would mutually abolish tariffs among the six countries and combine their respective markets. Their way of dealing with countries outside the EEC region was to establish an import-restriction policy involving high tariffs and import quotas.

The EEC's policy was to promote the growth of industries in its home countries by providing regional corporations with the privilege of unrestricted, tax-free distribution in a huge market. Countries outside the EEC region, however, would have to pay dramatically higher tariffs in exchange for import rights.

This meant that Honda motorcycles, after two months and considerable transportation expenditures, would be subject to an additional high tariff at customs in order to complete their voyage from Japan to the Port of Hamburg, the city in which European Honda was located. As a result, Honda would not break even unless the motorcycles were sold at a significantly higher prices than their European counterparts. To make matters worse, the EEC continued expanding its protectionist policy so that the gap in tariffs between Honda and the regional manufacturers of motorcycles continued to widen, causing Honda to become less competitive in the market.

Many countries, including Japan, did not really take the EEC's policy too seriously, believing it could not be easily organized or enforced since government policies and economic structures varied throughout the region. But they were eventually forced to change that view, and began scrambling for the means of coping with the situation.

Note:

*1 The three Benelux countries:Belgium,the Netherlands, and Luxembourg. The name is derived from the Benelux Customs League, a postwar charter established in January 1948.

The Challenging Spirit of Honda

1990 - 1999
  1. The Birth of Twin Ring Motegi / 1997The Birth of Twin Ring Motegi / 1997
  2. Entry to Champ Car Racing / 1994Entry to Champ Car Racing / 1994
  3. Odyssey / 1994Odyssey / 1994
  4. Establishment of Honda Taiyo, Kibo-no-Sato Honda and Honda R&D Taiyo / 1992Establishment of Honda Taiyo, Kibo-no-Sato Honda and Honda R&D Taiyo / 1992
  5. Hosting Hosting "Orei-no-kai" / 1991
  6. The NSX / 1990The NSX / 1990
1980 - 1989
  1. The VTEC Engine / 1989The VTEC Engine / 1989
  2. Honda EV Plus: The Dream of an Electric Vehicle / 1988Honda EV Plus: The Dream of an Electric Vehicle / 1988
  3. An Automated Line for Painting and Coating / 1988An Automated Line for Painting and Coating / 1988
  4. Four-Wheel Steering System (4WS) / 1987Four-Wheel Steering System (4WS) / 1987
  5. The Airbag System / 1987The Airbag System / 1987
  6. The ZE Engine (GX110 / 140 / 240 / 270 / 340 Series) / 1983The ZE Engine (GX110 / 140 / 240 / 270 / 340 Series) / 1983
  7. Formula One Entry / 1983Formula One Entry / 1983
  8. Development of Honda's Franz System Car / 1982Development of Honda's Franz System Car / 1982
  9. The World's Smallest Welding Line / 1982The World's Smallest Welding Line / 1982
  10. Transfer Lines for Modular Components / 1981Transfer Lines for Modular Components / 1981
  11. The Car Navigation System / 1981The Car Navigation System / 1981
  12. City / 1981City / 1981
  13. The F200 The F200 "Komame" Mini-Tiller / 1980
  14. Establishing Honda of America Manufacturing / 1980Establishing Honda of America Manufacturing / 1980
1970 - 1979
  1. The Oval Piston Engine / 1979The Oval Piston Engine / 1979
  2. Returning to the World Motorcycle Grand Prix / 1979Returning to the World Motorcycle Grand Prix / 1979
  3. The HR21 Lawn Mower / 1978The HR21 Lawn Mower / 1978
  4. Creating Hometown Forests / 1977Creating Hometown Forests / 1977
  5. The ME Engine (G100 / 150 / 200 / 300 / 400 Series) / 1977The ME Engine (G100 / 150 / 200 / 300 / 400 Series) / 1977
  6. Introducing the Accord / 1976Introducing the Accord / 1976
  7. CG125 / 1975CG125 / 1975
  8. Establishment of Honda Engineering / 1974Establishment of Honda Engineering / 1974
  9. Company Leaders Honda and Fujisawa Retire; Kawashima Assumes Presidency / 1973Company Leaders Honda and Fujisawa Retire; Kawashima Assumes Presidency / 1973
  10. Announcing the Civic / 1972Announcing the Civic / 1972
  11. Introducing the CVCC / 1972Introducing the CVCC / 1972
  12. Holding All Honda Idea Contests / 1970Holding All Honda Idea Contests / 1970
  13. Launching the Office of Safe Driving Promotional Operations / 1970Launching the Office of Safe Driving Promotional Operations / 1970
1960 - 1969
  1. The Dream CB750 FOUR / 1969The Dream CB750 FOUR / 1969
  2. Launching the Honda 1300 / 1968Launching the Honda 1300 / 1968
  3. The Hondamatic Transmission / 1968The Hondamatic Transmission / 1968
  4. Entering the Auto Market at Last / 1966Entering the Auto Market at Last / 1966
  5. The E300 Portable Generator / 1965The E300 Portable Generator / 1965
  6. Formula One Entry / 1964Formula One Entry / 1964
  7. Kyoto: Celebrating the Company's 15th Anniversary / 1963Kyoto: Celebrating the Company's 15th Anniversary / 1963
  8. Establishing Belgium Honda / 1963Establishing Belgium Honda / 1963
  9. Launching the S360 and T360 / 1962Launching the S360 and T360 / 1962
  10. Employing the Employing the "My Record" Project and Expert Certification / 1960
  11. The R&D Center Goes Independent / 1960The R&D Center Goes Independent / 1960
1950 - 1959
  1. Establishing American Honda Motor Co. / 1959Establishing American Honda Motor Co. / 1959

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