Yamaha Honda War

Yamctha has not only steppecl on the raiL

the earth. Yamaha wo tsubusu! [Crush.

s latLg ht e r, de s rolt Yatnaha ! l

of a tiger, it has ground it into

break, srnash, squash, bucher,

-Battle,7 iss,ed by Honda's prcsident Kawashima, Januat-v I9g2.l

What had Yamaha done that caused such a violent reacrion from Honda's president

Kawashinla? The explanation begins in the early 1950s when there were 50 competitors

tighting for position in the Japanese motorcycle marker. Demand was growing ,t"udily ot

over 40Vc per year. Honda was the number two competitor with a market share of 207r. Its

,.,Irh.rnrry was Tohatsu, the number one mororcycre (, manufacturer with a 22 percent mar- ket share. By most rneasures, Tohatsu', like the Shoguns whose military might allowed them

to rule supretne, dominated the .Iapanese motorcycle landscape, Tohatsu's after-tax profits

were 8Vc ol sales compared with Honda's 3.4Vo.It's debt-to-equity ratio was 1.5 to 1, whiie

Honda's was 6 to l.In 1955, the widely held view of tire compeiitors rn Japan's financial

community was:

Tohatsu: With Honda. one of tire two largest motorcycle manufhcturers. However, it

is considerirbly more profitabre anci its frnancial condition is superior.

Honda: Hish growth contributed to Honda's market share, but overexpansion deteriorated

its flnancial condition because of excess borrowings.2

However, in the space of five short years, Honda emerged as the undisputed leader of

the Japanese motorcycle