Honda Back in Black With Growing Sales, Market Share

This is part of a series of executive interviews on the state of the North American auto industry.

What a difference a year makes.

Honda was the Japanese auto maker most affected by the 2011 earthquake and tsunami in its home country that derailed production and stalled sales around the world.

In North America, where Honda builds more models than any other Asian brand, U.S. sales last year fell to 1.15 million units, marking a 12-year low, WardsAuto data shows.

Fast-forward to 2012, during which American Honda, which includes the Acura mid-luxury brand, has delivered 1.17 million vehicles through October, up 22.5% compared with year-ago and marking one of the largest sales spikes this year.

Enforcing that show of strength, Honda’s U.S. market share rose 7 percentage points to 9.8% through October, closing in on the auto maker’s high of 10.6% in 2010 and helping put distance between Honda and Asian rivals Nissan and Hyundai-Kia that widely are thought to have benefited from the auto maker’s sales and production decline.

American Honda this year has introduced a number of key models that include the next-generation Accord midsize sedan, one of the industry’s best-sellers; new Acura RDX cross/utility vehicle; battery-electric Fit compact car; and Civic-based, entry-level Acura ILX sedan.

In 2013, Honda says to expect the new flagship Acura sedan, the RLX; two hybrid Accords, including a plug-in due in January; and a thoroughly refreshed Civic, with an “emergency” redesign of its much-derided interior. Also due are the next-generation Acura MDX CUV and TSX sedan, according to WardsAuto.

In an interview conducted by email, John Mendel, American Honda executive vice president, discusses the auto maker’s efforts to get capacity back on track and the company’s positive 2013 outlook for U.S. sales.

WardsAuto:Does Honda have the capacity in place to meet expected market growth in 2013? And will you add production shifts or expand capacity in other ways, to meet growing demand?

Mendel:Yes, we are well-positioned to meet the increased demand we see for our lineup of new models. Over the past two years, we have invested more than $2 billion in our North American plants to expand and update our existing seven auto factories, as well as begin the construction of a new facility in Mexico.

Honda also added within the last year a second shift at (the Civic/ILX plant in Greensburg), Indiana, and resumed second-shift production on Line 1 (at the Accord/Acura TL plant) in Marysville, OH, for the first time since early 2009 to utilize our full current North American capacity of 1.63 million units.

With expansions announced for our plants in Indiana and Lincoln, AL, we will have a capacity of 1.72 million units in 2013. This will grow to 1.92 million in 2014, when we open the new plant in Guanajuato, Mexico, to build subcompact models such as the Honda Fit.

In January, the Alabama plant (that assembles the Odyssey minivan, Pilot CUV and Ridgeline compact pickup, and adds the Acura MDX CUV in 2013) will move to a new work schedule of four, 10-hour days per week, Monday through Thursday. That will leave Friday, rather than Saturday, for overtime production as needed.

WardsAuto:In light of forthcoming stricter U.S. fuel-economy regulations, what problems will you and your dealer network face selling electrified and other high-tech, fuel-efficient cars to American consumers in volumes?

Mendel:Through our Earth Dreams series, Honda is introducing new engine, transmission and hybrid-system technologies to address the need to improve fuel economy while also meeting the needs of customers for vehicles that are fun to drive.

Earth Dreams includes new direct-injection engines and advanced-technology transmissions, ranging from continuously variable transmissions to 7-speed dual-clutch transmissions. The roll-out of these technologies began with the ’13 Accord, which features a new direct-injection 4-cyl. engine and continuously variable transmission. The ’14 Acura RLX also will feature an all-new direct-injected V-6 engine.

We are beginning the introduction of a new series of Sport Hybrid technologies, including new 1-, 2- and 3-motor hybrid systems (for) volume models. The new 2-motor hybrid system debuts in January in the Accord Plug-in going on sale in New York and California, and in the Accord Hybrid in summer 2013.

Later in 2013, a version of the RLX will come to market with the 3-motor Sport Hybrid Super-Handling All-Wheel-Drive system to deliver both exhilarating performance and fuel economy at a high level.

WardsAuto:What makes you most optimistic about 2013?

Mendel:Our Honda and Acura product lineups are growing stronger by the minute and so is the marketplace. We have a wonderful synergy of all-new products that are resonating with our customers, a strengthened North American production network with more capacity and greater capabilities than at any time in our history and a market that is gaining strength.

WardsAuto:How critical is it for Honda to recruit outside the typically insular auto industry to keep pace with rapidly changing technology, such as autonomous vehicles, social-media marketing and infotainment?

Mendel:You can never have enough talent, so we’re always looking for great engineers and people of all stripes, but Honda research and development remains an incredible strength for our company for all things mobility. No one in the auto industry consistently invests a higher percentage of its profits into R&D than Honda.

WardsAuto:Honda sales have bounced back very well this year, up 22.5% through October, but it seems your products haven't resonated with enthusiasts. Do you need their approval or are you winning the game without them?

Mendel:Our focus is on earning the approval of our customers, but we also recognize that Honda’s reputation was built on the fact that we offer affordable and fuel-efficient cars that are also tremendously fun to drive.

Anyone who has driven the all-new ’13 Accord will immediately recognize that this remains part of our DNA. The Honda Fit remains on the Car and Driver 10-best list year after year – it’s sporty and fun to drive. We will continue to advance this aspect of our brand in all of our products moving forward.

We are about to launch the RLX that will symbolize our focus on creating a dynamic and emotional driving experience where the vehicle operates at the ‘will of the driver.’ This direction we call ‘the synergy of man and machine’ will become increasingly clear in all Acura vehicles in the months and years ahead.

WardsAuto:Regarding the new RLX flagship, why will this car succeed where its predecessors, the RL sedan and ZDX CUV, failed?

Mendel:The RLX was created based on a very clear brand direction that is focused on outstanding performance together with high fuel economy, great luxury and craftsmanship, and incredible intuitive connectivity.

But ultimately the driving experience will define the Acura RLX. I’m talking about dynamic and emotional performance that provides the driver with the feeling of connection to the product, the road and the world from the very moment they enter the vehicle.

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