Toyota, Honda battle it out with compact cars

NAGOYA — Toyota Motor Corp and Honda Motor Co are the winners in the Japanese auto industry, each turning out hit compact cars the Vitz and Fit, respectively. They are both likely to post record profits in the 2001 business year, ending this month.

Their corporate cultures and images contrast sharply. Toyota's origin as a vehicle maker goes back to 1937, when it spun off from its parent company, an automatic loom and industrial auto engine maker. Honda debuted as a motorbike producer in 1948.

Toyota took part in the prestigious Formula One race for the first time this year, starting with the Australian Grand Prix early this month.

With Finland's Mika Salo at the wheel, its red machine completed 58 laps and placed sixth. Honda's entry, driven by Japan's Takuma Sato, withdrew halfway through the race.

Honda had a brilliant record of 15 wins in 1988.

A Toyota executive was fired up, saying, "We would like to win within three years. Honda is our rival."

Toyota decided to participate in the Formula One race to draw young people's attention to its passenger cars.

Depending on the outcome of its performance in the race, it could tarnish its corporate image and affect its sales. But Toyota had good reason to challenge Honda.

Sales of new passenger cars, excluding minicars, totaled more than 4 million units in Japan last year. Toyota's share dropped slightly to 42.2% against a rise of 2.7 percentage points to 13.8% for Honda.

Sales of Honda minivans targeted at young families remain buoyant, forcing Toyota officials to fear they could lose out if they fail to get young customers.

Such feelings were behind Toyota's decision to join the Formula One this year, according to industry sources.

It had taken Honda engineers four years to develop the Fit to take on the Vitz, which Toyota produced as its world strategy passenger car.

Previously, Honda turned out the Logo as a model compact car. But it suffered a disastrous defeat in the market with sales far below company expectations.

"We disassembled Toyota's car and made a thorough study," said a Honda engineer. "We thought we would surely win."

The Fit has become Honda's biggest hit product ever, overtaking the Vitz and holding the top monthly sales position since last November.

The Fit has also made a good start in hotly contested Europe, where the Vitz had a head start and sells steadily. The two Japanese carmakers continue to be in neck-and-neck in overseas countries.

Toyota outdistances Honda in annual car sales in the rest of the world, with the totals in the range of 5.3 million units and 2.7 million units, respectively. The figures are record highs for both companies.

Toyota's Camry and Honda's Accord compete for the best-selling car every year in the United States.

As well, Toyota and Honda are in the race to become Japan's top carmaker in the development of technologies for hybrid electric-internal combustion and fuel cell-powered vehicles.

Japan Today (Kyodo News)