Throughout his life, Honda’s founder, Soichiro Honda had an interest in automobiles. He worked as a mechanic at the Art Shokai garage, where he tuned cars and entered them in races. In 1937, with financing from his acquaintance Kato Shichiro, Honda founded Tokai Seiki(Eastern Sea Precision Machine Company) to make piston rings working out of the Art Shokai garage.[12] After initial failures, Tokai Seiki won a contract to supply piston rings to Toyota, but lost the contract due to the poor quality of their products.[12] After attending engineering school without graduating, and visiting factories around Japan to better understand Toyota’s quality control processes, by 1941 Honda was able to mass-produce piston rings acceptable to Toyota, using an automated process that could employ even unskilled wartime laborers.[12][13]:16–19
Tokai Seiki was placed under control of the Ministry of Commerce and Industry(called the Ministry of Munitions after 1943) at the start of World War II, and Soichiro Honda was demoted from president to senior managing director after Toyota took a 40% stake in the company.[12] Honda also aided the war effort by assisting other companies in automating the production of military aircraft propellers.[12] The relationships Honda cultivated with personnel at Toyota, Nakajima Aircraft Company and the Imperial Japanese Navy would be instrumental in the postwar period.[12] A US B-29 bomber attack destroyed Tokai Seiki’s Yamashita plant in 1944, and the Itawa plant collapsed in the 13 January 1945 Mikawa earthquake, and Soichiro Honda sold the salvageable remains of the company to Toyota after the war for ¥450, 000, and used the proceeds to found the Honda Technical Research Institute in October 1946.[12][14]