Honda Losing Its Modesty

No doubt you have heard American Honda Motor Co. Inc. has the highest corporate average fuel economy in the U.S.

The strong advertising message is part of a more assertive corporate stance John Mendel, senior vice-president-automobile operations, promised last year for the auto maker.

Rightly so. With not a single V-8 engine and a product portfolio skewed toward fuel-efficient cars rather than gas-guzzling light trucks, no other producer has been better positioned to take advantage of consumers' shifting tastes in North America during the past 12 months than Honda.

And Honda indeed has taken advantage. Combined, Honda and Acura brand sales are up 3.6% in the U.S. through November, during a year that has been difficult for the industry in general, with the exception of Toyota Motor Sales U.S.A. Inc.

And, while auto industry news has been dominated by plant closings and the elimination of tens of thousands of jobs, Honda announced plans to build a new $550 million assembly plant near Greensburg, IN, and start production in fall of 2008.

The long-planned introduction of the Fit, a European-style B-car built in Japan and tweaked for American tastes, was a hit the minute it arrived in the spring. As gas prices soared, dealers could not keep the subcompact in stock.

The new Civic also is a hit. The new Acura MDX CUV gets high praise as bigger utility vehicles lose favor.

That's not to say Honda hasn't made a few missteps. Even though it was the first auto maker to offer a hybrid-electric vehicle in the U.S. (the quirky, 2-seat Insight), its environmental credentials have been overshadowed by the Toyota Prius. Moreover, the Honda Accord Hybrid, a pricey variant of the popular sedan that uses its HEV system to emphasize performance rather than fuel economy, has bombed. Observers wonder if it might be killed.

Mendel won't be pinned down on how committed Honda is to the idea of V-6-powered, performance-oriented HEVs, suggesting the public perception of what an HEV is and should be is still evolving.

Honda also remains little more than a niche player in the shrinking, but still vast, pickup truck market. It offers only the V-6 powered, compact Ridgeline, while Toyota is launching a big, new V8-powered fullsize pickup in February and Nissan North America Inc. has offered a fullsize truck for several years.

There also is some speculation the introduction of the next-generation Honda Accord sedan is behind schedule, but Mendel says that's not so.

The big question for 2007: With fuel prices apparently subsiding from record highs, and overall North America, sales expected to be flat at best, can Honda continue its sales momentum?

Mendel is circumspect about making specific predictions, but he says Honda is positioned to handle what likely will be a volatile, hyper-competitive year.

The rapid increase in gas prices last year caused some people to pull ahead vehicle choices, so there could be some softness in the market as a result, Mendel acknowledges. However, he says he thinks “the small car thing” is here to stay.

Without saying it directly, Mendel also suggests part of Honda's more aggressive stance is to get out from under the shadow of mighty Toyota, which has been stealing Honda's thunder in areas such as advanced powertrains and environmental leadership.

“In-your-face” advertising is not Honda's style, but the auto maker has become decidedly less modest in the way it touts new powertrain technologies, safety features and introduces some edgy new niche cars.

Honda will stick to its game plan and focus on the core issues of “clean, safe and fun,” Mendel says.

He points to the limited-edition Mugen Si sedan as an example of the auto maker's more forceful path.

The car is a Civic sedan specially tweaked by legendary Japan-based Honda tuner Mugen.

“We're being a little more comfortable and assertive about who we are.”