Honda: Not Concerned Whether Overtaken By Nissan

MIAMI BEACH, FL – Nissan has made no effort to conceal its desire to overtake Honda in annual sales in the U.S.

But a top Honda official is not bothered by the bluster coming from its competitor.

“They say that all the time, and the reality is the salesperson in me likes to be No.1 at what we do, and what I do. But our definition of No.1 is different than Nissan’s definition,” Jeff Conrad, group vice president-Honda Div. at American Honda tells WardsAuto in a recent interview here.

While the Nissan brand tops Honda in most global markets, the ranking is reversed in the U.S., where Honda has been the No.2 Japanese marque behind Toyota, and Nissan is the third-best-selling Japanese brand.

Although last year Honda delivered 100,000 more units in the U.S. than Nissan, 1.37 million to Nissan’s 1.27 million, this year Nissan is ahead of its Japanese rival, selling 201,226 units through February vs. Honda’s 182,676.

Conrad says Honda’s definition of success is being No.1 in retail sales. Although it isn’t as an entire brand (that honor goes to Toyota in the U.S.), it is in the segments of compact car, midsize sedan and CUV, and minivan.

“We want to be No.1 in retail, and we’re pretty pleased because for the last two years in a row we were No.1 in retail sales in the segments of Civic, Accord, CR-V (and) Odyssey,” he says.

Nissan officials point to the brand’s participation in the fullsize-pickup segment in the U.S. as the reason it should be able to overtake Honda annually.

Nissan hopes the new Titan will raise its share of the large-pickup segment to 5%, from 1% currently, equivalent to roughly 100,000 annual deliveries of the truck.

Honda doesn’t have a fullsize pickup, but its Ridgeline does compete with the Nissan Frontier in the midsize-pickup segment.

Yet, Nissan’s Frontier outsells the Ridgeline by a wide margin, with 2014 sales of 74,323 vs. 13,389.

Conrad implies Nissan is able to get a leg up on Honda because it sells to fleets and has lengthier loan terms.

“We have never been in the fleet business. We’ve stood in front of our dealers year after year at our annual conventions and (vowed not to enter it),” Conrad says.

However, Honda dealers can sell to fleets, and the brand has calculated this has resulted in 1%-2% of its annual U.S. deliveries eventually winding up at daily rental companies or in government or corporate fleets.

“The fleet business is a very slippery slope,” Conrad says. “It can be real easy, it can be very seductive…but once you do it then you’re hungry for those numbers,” Conrad says.

Nissan rarely discusses its fleet sales, but in the past has pegged its U.S. fleet ratio in the 15%-20% range.

Of lengthier loan terms, Conrad says Honda avoids these too, so buyers won’t become locked into a purchase they can’t escape.

“A lot of competitors out there are financing (some) customers…30%, 40%, 50%, for 72 and 84 months. When does somebody want to trade? Around five years. So at that point in time they can’t, they really can’t.”

Nissan U.S. sales chief Fred Diaz told WardsAuto in December the automaker does loans in excess of 60 months only “in very certain cases, with people that have the wherewithal and the credit score to be able to have that kind of a longer-term loan.”

Diaz said Nissan keeps lengthy loan periods to a “very small number” of the total loans it approves, and called long-range financing a possible “danger point” for the brand.

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