Honda Watching Domestics

Honda Motor Co. Ltd. doesn't come across as a company that sweats the competition much, but a top company official says he's counting on the Detroit brands being big players in five years.

General Motors Co. and Ford Motor Co. “probably have the biggest opportunity in terms of growth and resurgence in credibility with consumers,” says American Honda Motor Co. Inc Executive Vice President John Mendel.

“You can talk about current share, but (GM and Ford's) brands have a lot of awareness and equity,” Mendel says. “And I think, given an opportunity, consumers will give them a try.”

A former Ford executive, Mendel says he keeps a close eye on his old employer, which looks to have an edge because it avoided bankruptcy and spurned government loans. He says Honda's research clinics are encountering consumers who say they won't buy a car from an auto maker that has taken government money.

“We have to be careful not to fall into the Ford/GM myopic view of cross-town rivalries with ‘Honda and Toyota,’ or ‘Toyota and anyone else,’” he says of putting Detroit auto makers on his radar screen.

Maintaining Honda's advantage while the competition gets stronger will be no easy feat, he admits.

“While the gaps might be closing, I think we'll continue to try and lead the way in terms of (being the) benchmark for durability, quality, reliability and fuel efficiency,” he says, citing Honda's typically conservative stance of not chasing every new trend.

For instance, it wisely declined to follow Toyota Motor Corp. and Nissan Motor Co. Ltd. into big V-8s and fullsize pickups and SUVs.

Mendel hopes new products coming next year (the next-generation Odyssey minivan, refreshed Accord sedan and a new hybrid-electric sports car, the CR-Z) outpace the competition and keep Honda dealers busy.

However, he is a realist.

“I think you've got to plan for more of the same with a little bit greater potential for uptick next year,” Mendel says of the U.S. automotive outlook.

Mendel expects Honda sales will hit 1.14 million units for 2009, with 2%-4% annual volume growth expected in 2010.

Mendel paints 2009 as mostly terrible with “two months in the middle that felt pretty good,” referring to the sharp rise in vehicle sales spurred by the government's “Cash for Clunkers” program.

“It's kind of amazing what $3 billion in incentives will do to the marketplace,” he says.

Honda “wasn't stockpiling its chestnuts” in 2009, Mendel says, taking out 200,000 units of production from its plan “which got us in a good position for (the prolonged downturn).”

Since the stimulus program ended, the auto maker has been able to accumulate enough units through overtime to fill depleted inventories, he says. “And we're in a position where we're actually earning market share rather than buying it.”

Mendel is pleased Honda has stuck to its guns and held the line on incentives this year while competitors offered new spiffs.

“In the first quarter — January, February — there wasn't a lot going on in the industry. The ‘Saved by Zero’ thing kind of fell (flat),” he says, referring to Toyota's 0% financing offer.

“We held our position versus everyone else,” Mendel says.