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 Hondas prcsident Kawashima, Januat-v I9g2.l
What had Yamaha done that caused such a violent reacrion from Hondas 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, Tohatsus after-tax profits
were 8Vc ol sales compared with Hondas 3.4Vo.Its debt-to-equity ratio was 1.5 to 1, whiie
Hondas was 6 to l.In 1955, the widely held view of tire compeiitors rn Japans 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 Hondas 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