Honda Eyes 80 Million Kids

The growth in U.S. automotive sales may have slowed in 2004, but there is no black crepe hanging in Honda showrooms.

“Short term, the U.S. market may be somewhat saturated,” says American Honda Motor Co. Inc. Executive Vice President Tom Elliott. “But not long term.”

Elliott, who's retiring this year after working for Honda since hiring on in 1970 as a young sales assistant, adds: “Seventy-five to 80 million young people are getting to or near the driving age, ready to enter the car market. Prices are low, and more choices than ever are available. The market will grow to 19 or 20 million units some time in the future, but that's not to say we won't have peaks and valleys.”

Elliott rules out any need to reduce North American production, saying Honda will end up selling 1.4 million vehicles in the region in 2004, up 3.7% from 1.35 million in 2003.

“We're introducing some really nice new products — the Odyssey, Acura RL and Accord Hybrid this fall, a sport/utility truck (Ridgeline) next spring and more new products for the '06 and '07 model years.”

He suggests several new entries will spur growth in minivan sales and anticipates increased SUV sales.

“They're not dead or dying yet,” Elliott says of SUVs. “Crossovers are a new generation of SUVs. Just as the van market changed and went from truck-based to car-based, SUVs are going the same way.”

Elliott says a new Acura cross/utility vehicle (smaller than the MDX) due out in 2006 will enter the luxury market, where he expects continued growth.

“When Acura was introduced in 1986, the luxury-vehicle segment was only about 10% of the U.S. market,” Elliott says. “Now it's more than 15% and getting close to 18% in some areas.”

He expects demand in this segment to peak at around 20% of the market because, “once you get past $60,000, there's not a lot of business.”

Meanwhile, Honda is trying to cut the time between dealer orders and deliveries.

“Our first goal was to get 100% of our products down to a 30-day lead time and we're getting close, about 80% today. After that, we'd like to have a significant number delivered to dealers within two to three weeks,” says Elliott.

“And we're working to reduce dealer inventories to a 40-day supply or less. The industry traditionally has worked with a 60-day supply. We're probably down in the 45-day range now, on the ground and in the pipeline.”