Honda Gaining Ground, But Inventory Woes to Curb U.S. Sales for 2011

NEW YORK – American Honda has made big strides in filling its vehicle-pipeline to dealers but will nevertheless end 2011 with about 100,000 units less volume than last year, a top official says.

“We're not able to fill the pipeline as fast as we'd like,” says Mike Accavitti, vice president-marketing operations.

Civic continues conquests, despite supply shortage.

Still, Honda is in better shape than it was a few months ago, when executives believed the brand would sink 200,000 units below forecasts for the year.

Floods in Thailand continue to impact availability of certain components, and Civics and Accords remain in short supply.

“We're selling (vehicles) off the truck,” Accavitti says. Honda's turn rate has been running at 15 days this year, well below its typical 60-day pace.

“Our goal is to sell cars, not fill up dealer lots,” the executive notes. But he predicts dealer inventories will recover in several months.

The biggest drawback to having below-normal stocks is the inability to supply customers with the exact color and trim level they want.

Surprisingly, Honda says this has not impacted conquest sales, which are running at 55% in the case of the recently launched Civic.

Tight inventories are creating better margins for dealers, but Honda still is offering incentives on some models to keep pace with competitors.

However, most sales are transacting at close to sticker, Accavitti says.

Dealers have not used supply shortages to add premiums to the bottom line, he says.