The Shocking State of Motorcycles in Developing Countries

The following story is a lengthy historical piece supplied to us by Honda. It details the design challenges faced when creating motorcycles for "developing countries". Grab a coffee, some spare time, sit back and enjoy!

Exports of motorcycles to developing countries increased dramatically during the 1970s, consistent with the growth of Southeast Asia's economies. Consumers in that region wanted practical motorcycles that could handle multiple passengers and overloading.

In order to meet the growing needs of this region, Honda exported the CS90 model with four-cycle OHC in January 1968, and then the CB100 in September 1969. In contrast, the company's competitors were exporting two-stroke, 100-cc models. Due to a lack of proper maintenance-a condition unique to that part of the world-Honda was losing ground to other manufacturers. In response, Honda developed a model featuring its new OHV engine, exporting it as the S110 in March 1973. The real problem, however, was not so easily solved.

In May 1974, in order to conduct thorough research in actual markets under real-world conditions, Takeshi Inagaki, who was in charge of creating motorcycles for developing countries, and Einosuke Miyachi, the man in charge of design, left Japan from Haneda International Airport. They spent a month watching motorcycle users in major cities throughout Thailand, Malaysia, Indonesia, the Philippines, Iran, and Pakistan. What they saw, though, was beyond anything they could have imagined.

"It was normal to see a child on the tank and the wife at the back, with two to four people riding together," Inagaki recalled. "And some people loaded vegetables, chickens, and pigs onto their motorcycles. I even saw motorcycles towing loaded carts."

The dealer situation, too, was completely different from that found in Japan. At the time, the dealer's primary responsibility was to disassemble and repair motorcycles that were not in working condition. Customers typically brought their motorcycles in only when they had stopped running. Therefore, the concept of routine maintenance was completely foreign to the dealers and customers.

"They continued to use oil even after it had turned into goo," Inagaki said, "and the paper filter elements in the air cleaners would become solid as a dirt wall from all the dust. The drive chains would be stretched out to their maximum adjustable lengths, and were worn and torn from hitting the chain case. The examples of such abuse went on and on. One after another, we saw spectacles we'd never even imagined possible from our home base in Japan."

It was thus apparent that due to their complex structure the four-cycle, OHC motorcycles could not perform to their true potential in developing countries, where people subjected their bikes in the harshest conditions and the dealers were unable to provide sufficient service.

Following such market research it was concluded that Honda should develop a motorcycle that was above all practical and durable; and that it should have an engine with a maintenance-free, four-cycle design.

Immediately on their return from abroad, Inagaki and Miyachi submitted their findings to the Board of Directors at the R&D Center. Upon hearing the report, Tadashi Kume, the center's managing director, told Inagaki to "bring me some triangles, a compass and graph paper."

Inagaki was puzzled by the request, but nevertheless, he fetched the items for Kume and started out for home. All the way, though, he was curiously uneasy about what Kume was planning.

"Then it hit me, when I was enjoying that first meal at home after such a long time," he said. "Mr. Kume was drawing up a new engine concept." That same night, Inagaki drew up a concept for a lightweight, OHV inline single-cylinder engine with a short pushrod; an idea much like the one he had thought of on the flight home to Japan. The following morning, Kume walked into the engineering design room with an engine layout, just as Inagaki had expected. His plan beautifully and precisely depicted an OHV engine, despite the fact that it had been drawn freehand. Inagaki, too, presented his conceptual drawing.

"We learned a lot by comparing ideas," Inagaki said. "In the end, Mr. Kume kindly said, 'your lightweight, short-pushrod design is an interesting one,' so my plan was selected."

With the basic concept of the engine established,-in March 1974-the development team got down to the real task of making the project work. The challenge was to develop a model exclusively for developing countries in which knockdown production was also possible. The project was given a one-year period for full development. Still, several conditions had to be met, among which were the following:

1. The motorcycle had to have a four-cycle OHV engine with excellent gas mileage and rugged durability.
2. There must be two levels of engine displacement- 110cc and 125cc-using the inline cylinder.
3. The exterior design must be sporty and fun.
4. It must be designed with an emphasis on practical, daily use, with easy maintenance being a key feature.

"I chose an inline OHV engine, because I wanted to completely change the image evoked by the S110," Inagaki recalled. "I wanted to revive Honda's image as a maker of sporty motorcycles. But at that time, the purchase of a motorcycle would have been only a dream for most people in developing countries; a real status symbol for the common citizen. A motorcycle was a treasured possession that one could finally acquire after having saved enough money. So, of course it would have to last a long time."

The OHV engine successfully answered the question of durability, employing a lightweight, short pushrod for higher performance and easier maintenance. It would also enhance productivity by sharing the same processing line with the OHC engine.

Two types of motorcycle frames and bodies were developed for the project: a steelplate-press specification suitable for mass production at Kumamoto Factory, and a pipe specification for knockdown production in various countries. The pipe specification did not require large, expensive presses or dies, facilitating production with only a minimal investment. Moreover, it complied with the golden rule of overseas factory development: that to borrow a time-honored Japanese saying the company could "give birth to a small child and raise it to be a big grown up." To ensure that the bike could handle the anticipated load placed on it by two to four riders, its diamond frame would be enhanced considerably.

Two types of gas tanks were developed, making the top flat so that a child could sit on it. To ensure successful sales in each of these countries, during the previous stage of planning several colors and stripes were prepared. Further, two seat designs had been developed simultaneously: a long seat for multiple riders and a seat with a cargo carrier that would accommodate the expected degree of overloading.

The air-cleaner element was changed to washable Styrofoam urethane, to withstand repeated cleanings. This design employed Honda's first dual-element structure. The outer cylinder featured a large-mesh grid, acting as a primary filter, while the inner cylinder completely filtered out dust particles greater than 20 microns in diameter. Moreover, any dust smaller than 20 microns would be completely removed by the oil impregnated within the element. This would prolong engine life and significantly improve its reliability.

Several other innovations in mechanical design, specification, and manufacturing technology were incorporated into the new motorcycle, each with the goal of making it maintenance-free, durable, and easy to produce. A great deal of consideration went into developing a motorcycle that people in developing countries would find easy to use and easy to own.

Development was, thus, complete, and the motorcycle went on to a favorable reception among the representatives of several developing countries who attended the December 1974 S•E•D meeting and test ride in Thailand. The following day, Honda officials demonstrated the motorcycle's easy maintenance and assembly at a dealership, where local mechanics were asked to disassemble, reassemble, and inspect the motorcycle without the benefit of prior instruction. The results were incredible. Within a mere 20 minutes, they were able to reassemble the portion of the engine above the cylinder, including the new OHV mechanism. The engine started on their very first attempt!

The test ride was conducted using a measuring device that had been brought from Japan to Thailand. High-speed driving in the intense summer heat, along with high temperature testing, were conducted on the Asia Highway, which was nearly complete. Driving overloaded in Bangkok, conducting "knocking tests" using local gasoline, riding under intense heat and amid thick, choking clouds of dust were all part of the process. Said Inagaki, "test rides of every imaginable situation were done repeatedly, and soon we were confident that this motorcycle would meet the demands of the region."

The CG110 and 125 were now ready for their first destination: the Thai market debut of March 1975.

Kensuke Fukatsu, then section manager of the No. 2 Business Affairs Section, the KD Technology Office, had just returned to Japan from his stint working at Belgium Honda in March 1974, when he was promptly assigned the task of building a motorcycle factory in Brazil.

"The personal belongings we had sent from Belgium had not yet arrived in Japan," remembered Fukatsu, "when I was told by Hiroshi Suzuki, the head of the Technology Office (later the president of Brazil Honda), to go to Brazil immediately."

According to Koichiro Yoshizawa, head of the Foreign Affairs Division, "The Brazilian economy had been on a real growth trend since the second half of the 1960s throughout the '70s. People spoke of Brazil as a 'shining star' among the world's developing countries. Furthermore, a colleague stationed there had submitted his opinion that there was great potential for future growth in Brazil's motorcycle market. That's why we wanted to build a production base in Brazil to meet the future demand throughout Central and South America, regardless of whatever challenges it might have meant."

Honda had considered expanding its production bases overseas during the early 1970s. By 1974, when Fukatsu returned to Japan from Belgium, a full-scale operation to realize the Honda policy of "producing products in the markets where they are sold" had been implemented, the initial task of which was to identify potential markets. Therefore, in addition to the work on behalf of Brazil, many other projects were launched, such as those destined for Italy, Iran, and Nigeria.

Honda officially started its Brazilian operations in November 1971, when Honda Motor Do Brazil was established, importing and selling motorcycles under the management of Osamu Iida. Fearing that the Brazilian government might impose a ban on imports of completed motorcycles due to a lack of foreign currency, Iida had wanted to build a motorcycle manufacturing plant in that country. Therefore, with the approval of Executive Vice President Kihachiro Kawashima and Yoshizawa, he obtained a 1,487,700 square-meter plot of land for $1 million in the suburban São Paulo district of Sumare.

The launch of the Brazil Factory Construction Project in April 1974 meant that Fukatsu, the project's director, would make repeated trips between S?o Paulo and Tokyo. Recalled Yoshizawa of the factory's construction, "Having learned from the bitter experience in Belgium, I asked Mr. Fukatsu and others to start by building a small factory."

Iida and Fukatsu negotiated with the Brazilian government to build a factory on their land in Sumare. However, strict conditions were then imposed in all areas, including the percentage of parts that had to be obtained locally and the investment amount. Because the area was already designated as industrial, new competition was not being welcomed. Therefore, ultimately, they had no choice but to give up, abandoning their Sumare Factory project at the beginning of 1975.

Ironically, more than twenty years later, in September 1997, Honda established an auto production factory which was completed on the Sumare site by reinvesting the profits gained locally in the motorcycle business. With that, the new auto factory began producing the Honda Civic.

During the initial Sumare project effort, a series of strong suggestions by Mr. Natan, president of Moto Importadora, the importer of Honda products in the city of Manaus, urged Iida to build a factory in this northwestern Brazilian city. Because Mr. Natan was so persistent, Iida and Fukatsu finally gave in and visited Manaus early in 1975. Once there, they were greeted by Mr. Natan's enthusiastic, persuasive talk and a strong request from Mr. Canpeiro, head of the Manaus Free Trade Port Management Agency, who said, "We would like to industrialize this region. Therefore, we wish to extend a warm welcome to Honda if you would join us here."

Because Manaus was a free-trade port, upon their arrival Fukatsu and Iida learned that to build a new factory there would allow them the privilege of paying no business taxes for a period of ten years. Moreover, the steps required to reach the percentage of local content were much more relaxed than in São Paulo.

"The tax privilege," said Fukatsu, "was more than enough to offset the disadvantage of distributing parts and completed vehicles between São Paulo and Manaus. Additionally, from the standpoint of local-content percentage it meant only a small initial investment. This was very much in keeping with Honda's policy of 'bearing a small child and raising it to be a big grown up.' "

Iida had made up his mind to build a factory at Manaus. Therefore, in order to obtain the approval of the Board of Directors, Fukatsu went back to Tokyo. Later, following an exhaustive feasibility study and approval from the Board of Senior Managing Directors, an application for construction was submitted to the Brazilian government. Although the expected period of Presidential approval was at least a month, the plan was approved in a very short time due to a strong push from Natan and Canpeiro.

"These two believed their dream of developing Manaus would finally come true, thanks to the cooperation of Honda," Fukatsu recalled. "I heard they even went to the trouble of traveling to the Presidential Office in Brasilia on our behalf."

Factory construction began immediately upon receipt of official approval in September 1975.

The Brazilian motorcycle company and plant started as Moto Honda da Amazonia (HDA), a joint venture with 60 percent Honda Motor investment and 40 percent from Moto Importadora. Kazuhira Kato, who was to serve as the factory's first manager, was just 34 years of age. Most of the dozen or so employees from Japan were young as well, and many were still in their 20s. Nevertheless, they struggled under the burning sun alongside local construction workers. Outfitting the factory without the help of forklifts or cranes was made possible only with the help and advice of the locals themselves. Because many locally hired associates could barely write their own names, Kato gave instructions that all charts depicting standards of operation should be made using pictures.

Brazil was at that time a local producer and seller of Volkswagen Beetles, in a market that had grown through the development of an expressway network in the city of São Paulo. To meet the conditions of mixed traffic-and to satisfy local preferences in motorcycles-the CG125, which had just gone on sale in developing countries such as Southeast Asia, was selected for production at HDA. Therefore, in October 1976, HDA began large-scale production of the CG125.

The combination of hardworking young Japanese employees and aspiring local associates resulted in effective teamwork. As part of that process, Honda's principle of "focusing on real-world, on-site operations, while facing up to the challenges inherent in reaching a goal" was disseminated among all personnel.

"Mr. Kato and others, who made up the first team of Japanese workers at HDA, went through some extreme hardships," Fukatsu remembered. "Nevertheless, they built a solid foundation for the growth of HDA." The Manaus Factory is special, since it produces a high percentage of its own parts.

"Parts manufacturers in Brazil were oriented toward car production," said Katsuhiro Aizawa, the second director at Honda's Brazilian R&D Center. "Their production plants were also concentrated in São Paulo. In Manaus, we had a geographical disadvantage of being about 4,500 kilometers away. That's why in Manaus we promoted the in-house production of parts, even those not made by our Kumamoto Factory. We did it with the help of many parts makers with whom we had good business relationships."

The Brazilian R&D Center greatly improved the process of meeting the local-content stipulation. It did so by drawing up plans for the CG125 that directly reflected makers' demands that it be built using local supplies. The R&D Center was also a significant contributor to other accomplishments, including the development of alcohol-fueled vehicles unique to Brazil.

Business was not always so smooth in Brazil. The nation was struck with severe inflation in the mid-1980s, which produced a rapid decrease in the number of CG125s sold from 1986 to 1987. Added to that was a price-control ordinance that brought about a financial pinch at HDA.

"At one point," Yoshizawa said, "I feared we'd have to give up on the Manaus Factory."

During that period Yoshizawa, then the executive vice-president of Honda Motor, went to Brazil for a meeting with the Brazilian Finance Minister and Fukatsu, who was then the president of Brazil Honda. Citing a price control that had caused CG motorcycles to be cheaper than mopeds, they pleaded with the minister to approve a price increase for CGs. The negotiations were difficult. Finally, Yoshizawa stressed that the profits gained by Honda in Brazil were never allotted to Honda in Japan. The profits, he said, were reinvested into the factory at Manaus, solely because Honda had wanted to make its factory a major production base for South America.

"The finance minister finally understood Honda's corporate approach," Yoshizawa said. "He understood we were nurturing a company that was deeply rooted in the local community. Immediately afterward, he visited our factory in Manaus, and from then on things were relatively smooth. In the end, the facts had convinced him. I realized then that Honda's philosophy was a splendid one."

Today, more than twenty years after the introduction of the CG125-and following the resolution of several crises-the motorcycle is made from 98 percent local content. In fact, it has become an extremely popular model, commanding an incredible 90 percent share of the market for Brazilian-made motorcycles. The annual production of motorcycles, which started in the 18,000s, now stands at more than 280,000 units.

Inagaki, who is in the true sense the creator of the CG125, had the following to say about issues facing the Brazilian market:

"São Paulo had a well-established car culture, because of which, cars could travel fast on roads with relatively little traffic congestion. We should introduce larger motorcycles there that can have a commanding presence amid the flow of traffic. That should enhance Honda's brand image even more. On the other hand, I believe we should introduce motorcycles that could be built at half the cost of the CG125, and which could be exported to countries neighboring on Brazil. In the next generation, I believe we'll have to expand our pool of product users."

Source: Honda Motor Co., Ltd

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