Honda Cars Defying Gravity

DAVIS, CA – In a light-truck-crazed U.S. market, only two mainstream auto brands have increased car sales this year.

Honda is one of them.

The marque’s car deliveries were 10.2% higher in first-half 2016, a period when Toyota’s car volume fell 10.8%, Ford’s was down 9.1%, Mazda’s declined 11.0% and Hyundai’s slipped 6.7%. Chrysler’s car sales have plunged a whopping 45.4% so far this year.

How is Honda able to increase sales of sedans and coupes while others are struggling? The brand’s U.S. general manager credits good product and the new 10^th-generation Civic that’s drawing buyers into showrooms.

“I like to think it gets back to that old adage if you build a better mousetrap they’ll beat a path to your door,” Jeff Conrad tells WardsAuto here at a ’17 Accord Hybrid media backgrounder.

Like most B-cars in the U.S., Honda’s Fit subcompact is down vs. year-ago, but the C-segment Civic and D-segment Accord rose 19.9% and 8.7%, respectively, in the January-June period.

“I think a lot of it is being driven by the Civic,” Conrad says. “The Civic is generating a lot of traffic, and somebody walks in (to a Honda showroom) and says, ‘Well, I saw that new Civic and…I want to check that out. (But I see) for a few bucks more I can buy this Accord, and that really meets my needs for whatever reason and it fits within my pocketbook.’”

The Civic sedan was all-new last fall and the coupe version bowed in the spring. The current-generation Accord debuted in ’13, but received a freshening for ’16.

Conrad insists it’s not Honda’s incentive spending that is fueling the growth on the car side, calling it “a fraction of what many others spend in the marketplace.”

TrueCar put Honda/Acura’s average per-unit spiff at $1,845 in June, the second lowest among major automakers. That compares with a nearly $4,000 per-unit incentive at General Motors last month and $3,208 at Nissan, the only other automaker whose mainstream brand posted increased car sales in the year’s first half.

However, Honda’s incentive spending did rise 5.1% in June from May, although $1,845 is 3.7% lower than the automaker’s June 2015 per-unit spiff.

“Last fall people were saying, ‘Why are you investing in Civic? You’ve got a pretty good Civic as it is and people are leaving this segment to go into SUVs,’” Conrad notes. “And we sold 350,000 Civics a year ago. We sold 350,000 Accords. It’s still a big segment you know? People may be migrating to other things, but (car is) still a big segment.”

Through May, Honda increased production of the Accord 5.1% vs. January-May 2015, WardsAuto data shows. Civic U.S. builds spiked 19.5% and Civic output at Honda’s Alliston, ON, Canada, plant rose 17.8% in the period.

Honda did cut 4,700 cars from its third-quarter production schedule and its planned Q3 build of 224,800 units is 5,900 units, or 2.6%, below Q3 2015 230,700 cars.

However, most of the reduction compared with year-ago comes out of Mexico, where Fit output is being limited in favor of its platform-mate, the hotter-selling HR-V subcompact CUV.

U.S. Q3 car builds, falling 2.9% below year-ago, likely can be attributed to reduced output of slow-selling Acura ILX and TLX cars. ILX inventory rose 22.8% in late June vs. late May, while TLX inventory climbed 6.6%. Days’ supply of both cars was 130 or more, well off the industry average of 64 last month, WardsAuto data shows.

Honda Q3 output of cars in Canada is set to slip slightly, down 0.5%. Civic supply was at a lean 49 days in late June, suggesting Honda may be seeing a weaker car market ahead or is trying to carve room in the market for the forthcoming imported Civic hatchback due this fall.

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