Oil embargo bad for many, great for Honda

High demand for the fuel-efficient Civic spurred dealers to add Honda franchises

Panic buying of gasoline during the oil shock of 1973-74 confirmed what dealer Ron Tonkin had foreseen a decade earlier when he began begging Honda Motor Co. for a car franchise. He wanted Honda even before the brand was sold in the United States.

Tonkin, a successful Chevrolet dealer in Portland, Ore., believed that the price of gasoline could not stay low forever. And he predicted that Americans one day would embrace well-made imports.

Honda granted Tonkin his franchise in 1969. In October 1973, an oil embargo by Arab states caused oil prices to quadruple to $12 a barrel. Long lines snaked around service stations nationwide.

"People just went crazy for Hondas," says Tonkin, CEO of the Ron Tonkin Family of Dealerships in Portland. "We had people on waiting lists and sold whatever we could get our hands on."

Perfect timing

The oil embargo of 1973-74 started when Arab nations withheld oil to protest U.S. support for Israel during the Yom Kippur War. The embargo expanded as the Organization of Petroleum Exporting Countries cut oil production and temporarily banned exports to the United States.

The embargo hit at a perfect time for Honda. The company was just introducing the Civic sedan in the United States. The Civic had a new fuel-efficient, low-emissions engine.

The oil embargo and the Civic gave Honda an instant high profile, says Tom Elliott, retired chief of Honda's U.S. operations.

In 1974, U.S. Honda sales were 41,638. In 1975, sales more than doubled to 102,383. The following year, Honda launched the larger Accord sedan into the sweet spot of the American family market.

The embargo "really changed people's opinions about Honda and other small cars," Elliott says. "Sometimes timeliness is better than other things."

When fame struck, most Honda dealers like Tonkin were operating modestly. For the first few years after getting his franchise in 1969, Tonkin operated his Honda dealership out of a corner of his Chevrolet showroom.

Exclusive Honda deals

With the Civic and Accord, dealers built enough volume to open stand-alone dealerships. Tonkin, who was president of the National Automobile Dealers Association in 1989, said he moved his Honda franchise outside the Chevrolet walls in 1983.

The new site was down the street from the Chevrolet dealership at the site of a former Pontiac dealership. Tonkin, now 77, says he bought the property and was ready to operate the Pontiac store. But Pontiac executives balked at allowing him to operate a Pontiac dealership so close to the Chevrolet store.

So after directing a tirade at a Pontiac regional manager, Tonkin impetuously decided to move his Honda store there, he said. Success followed immediately.

Said Tonkin: "It was probably the only time in my life that my temper got me into a good fix instead of a bad one." 

You can reach David Barkholz at dbarkholz@crain.com. -- Follow David on and