Businessweek: Honda Slips Into Reverse
#1
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Businessweek: Honda Slips Into Reverse
http://www.businessweek.com/magazine...4024664807.htm
Cheap leases helped sales but didn't stop the share slide Justin Sullivan/Getty Images
Cheap leases helped sales but didn't stop the share slide Justin Sullivan/Getty Images
By David Welch
BW Magazine
Given the troubles of archrival Toyota, Honda should be cleaning up this year. It isn't working out that way. After a decade of nonstop growth in the U.S., Honda Motor (HMG) fell from a 10.5% share in the first quarter of 2009 to 10.1% in the same period this year. (Rival Nissan Motor now has 9%, up from 7.9%, and Hyundai Motor is up to 4.4%, from 4.2%.) Honda "has lost its mojo with new model launches," says Jessica Caldwell, a senior analyst at car shopping site Edmunds.com.
While Honda's sales are up 12.5% from last year's dismal first quarter, the overall market grew by 17.1%. The company once offered a sportier alternative to stodgy-but-reliable Toyota Motor (TM), but Honda's cars now look pale alongside newer models from Nissan, Hyundai, Ford (F), and General Motors, says John Wolkonowicz, an analyst at IHS Global Insight. With its reputation for performance and handling, Honda "used to be the Japanese BMW," Wolkonowicz says. "It's not anymore."
Honda declined to make any executives available for this story. A spokesman says the company isn't concerned about market share; it is profitable and remains focused on providing reliable, safe, efficient cars. Nonetheless, Honda in March offered cheap leases to battle 0% financing deals from Toyota as that company sought to shore up sales in the wake of its recall problems. Honda's program boosted interest somewhat, but the market-share slide continued.
OUTSOLD 2 TO 1
The new Accord Crosstour is emblematic of Honda's woes. Honda launched the model in November, billing it as a mash-up of an SUV and a sedan. Trouble is, the Crosstour has neither the room of most SUVs nor the look and feel of a sedan, says James N. Hall, principal of 2953 Analytics, an auto consultancy in Birmingham, Mich. And the Crosstour only comes with a V-6 engine, pushing the price to $30,000. Not only is it about $3,000 more than Toyota's competing Venza but it also uses more fuel. This year the Venza has outsold the Crosstour by nearly 2 to 1.
Honda has similarly stumbled with the Insight. During the hybrid's splashy relaunch last year, Honda pitched it as a less expensive alternative to Toyota's Prius. In 2010, Honda has moved fewer than 5,000 Insights in the U.S., about one-sixth the number of Priuses Toyota has sold. And in March, Ford's Fusion hybrid edged out the Insight 1,670 to 1,652 even though the Fusion costs some 35% more. While the Fusion is roomier, it gets nearly the same gas mileage, about 40 miles per gallon.
Even Honda's core models are under pressure. The Civic compact, the No. 6 seller in the U.S. in 2009, is No. 7 this year, researcher Autodata reports, and sales of the CR-V are off by 4.2%. And while Accord sales are growing, Honda opted for more conservative styling when it relaunched the sedan last year. Now potential buyers are exploring other options; a year ago, only 5% of visitors to Edmunds.com interested in the Accord also checked out the Hyundai Sonata, and 6% looked at Ford's Fusion. This March, 12% of Accord shoppers considered the Sonata and 9% gave the Fusion a look.
One such shopper is Charles Summers, who works for a human resources firm near Atlanta. With his first child on the way, Summers figured he would trade his 2007 Hyundai Elantra for an Accord. But he found the styling bland and felt the Sonata was more comfortable. So he spent $26,000 for a Sonata, while a similarly equipped Accord would have cost more than $28,000. "I thought for sure I'd end up with an Accord," Summers says. And that's how market share slips away.
Welch is BusinessWeek's Detroit bureau chief.
BW Magazine
Given the troubles of archrival Toyota, Honda should be cleaning up this year. It isn't working out that way. After a decade of nonstop growth in the U.S., Honda Motor (HMG) fell from a 10.5% share in the first quarter of 2009 to 10.1% in the same period this year. (Rival Nissan Motor now has 9%, up from 7.9%, and Hyundai Motor is up to 4.4%, from 4.2%.) Honda "has lost its mojo with new model launches," says Jessica Caldwell, a senior analyst at car shopping site Edmunds.com.
While Honda's sales are up 12.5% from last year's dismal first quarter, the overall market grew by 17.1%. The company once offered a sportier alternative to stodgy-but-reliable Toyota Motor (TM), but Honda's cars now look pale alongside newer models from Nissan, Hyundai, Ford (F), and General Motors, says John Wolkonowicz, an analyst at IHS Global Insight. With its reputation for performance and handling, Honda "used to be the Japanese BMW," Wolkonowicz says. "It's not anymore."
Honda declined to make any executives available for this story. A spokesman says the company isn't concerned about market share; it is profitable and remains focused on providing reliable, safe, efficient cars. Nonetheless, Honda in March offered cheap leases to battle 0% financing deals from Toyota as that company sought to shore up sales in the wake of its recall problems. Honda's program boosted interest somewhat, but the market-share slide continued.
OUTSOLD 2 TO 1
The new Accord Crosstour is emblematic of Honda's woes. Honda launched the model in November, billing it as a mash-up of an SUV and a sedan. Trouble is, the Crosstour has neither the room of most SUVs nor the look and feel of a sedan, says James N. Hall, principal of 2953 Analytics, an auto consultancy in Birmingham, Mich. And the Crosstour only comes with a V-6 engine, pushing the price to $30,000. Not only is it about $3,000 more than Toyota's competing Venza but it also uses more fuel. This year the Venza has outsold the Crosstour by nearly 2 to 1.
Honda has similarly stumbled with the Insight. During the hybrid's splashy relaunch last year, Honda pitched it as a less expensive alternative to Toyota's Prius. In 2010, Honda has moved fewer than 5,000 Insights in the U.S., about one-sixth the number of Priuses Toyota has sold. And in March, Ford's Fusion hybrid edged out the Insight 1,670 to 1,652 even though the Fusion costs some 35% more. While the Fusion is roomier, it gets nearly the same gas mileage, about 40 miles per gallon.
Even Honda's core models are under pressure. The Civic compact, the No. 6 seller in the U.S. in 2009, is No. 7 this year, researcher Autodata reports, and sales of the CR-V are off by 4.2%. And while Accord sales are growing, Honda opted for more conservative styling when it relaunched the sedan last year. Now potential buyers are exploring other options; a year ago, only 5% of visitors to Edmunds.com interested in the Accord also checked out the Hyundai Sonata, and 6% looked at Ford's Fusion. This March, 12% of Accord shoppers considered the Sonata and 9% gave the Fusion a look.
One such shopper is Charles Summers, who works for a human resources firm near Atlanta. With his first child on the way, Summers figured he would trade his 2007 Hyundai Elantra for an Accord. But he found the styling bland and felt the Sonata was more comfortable. So he spent $26,000 for a Sonata, while a similarly equipped Accord would have cost more than $28,000. "I thought for sure I'd end up with an Accord," Summers says. And that's how market share slips away.
Welch is BusinessWeek's Detroit bureau chief.
#3
A good read and on the money. I don't like to see a once great company go to the dogs but Honda is heading in the wrong direction at a bad time. There are stronger competitors (Hyundai, Ford, Nissan) in the pool and they are being aggressive and forward while Honda is being conservative and backward.
They were in the best position to benefit from Toyota's recent setbacks but others have capitalized instead. Not to mention the likelihood that Toyota's position will continue to strengthen in the future.
They were in the best position to benefit from Toyota's recent setbacks but others have capitalized instead. Not to mention the likelihood that Toyota's position will continue to strengthen in the future.
#4
Lexus Fanatic
Good article, we saw this coming didn't we.
Crossturd is "poster child" for what's wrong at Honda. Venza is a great example of how to do it right in that particular niche.
About time Honda/Acura focus on their (automotive) business and less on making excuses.
Crossturd is "poster child" for what's wrong at Honda. Venza is a great example of how to do it right in that particular niche.
About time Honda/Acura focus on their (automotive) business and less on making excuses.
#5
These days I am always happy to some Honda bashing.
The only point I disagreed with was the Venza v Crosstour bit.
The Crosstour/ZDX are cheap and cheaper (through badge engineering 101)
X6 competitors.
The thing I keep harping on is, Honda/Acura knew real customers, hate the ZDX and we told them so at focus groups about 4 years ago.It appears that once a green light on a project at Honda/Acura is given, no one seems to be able to stop it.
Did anyone see the Fast Lane Daily video from the NY Auto Show of one of their reviewers trying to get into the back seat (priceless moment)?
The only point I disagreed with was the Venza v Crosstour bit.
The Crosstour/ZDX are cheap and cheaper (through badge engineering 101)
X6 competitors.
The thing I keep harping on is, Honda/Acura knew real customers, hate the ZDX and we told them so at focus groups about 4 years ago.It appears that once a green light on a project at Honda/Acura is given, no one seems to be able to stop it.
Did anyone see the Fast Lane Daily video from the NY Auto Show of one of their reviewers trying to get into the back seat (priceless moment)?
#6
Lexus Fanatic
Don't agree that the Crossturd was intended as X6 competition (given it's already documented weak track record and huge price difference), I doubt the Honda marketing people are that far removed from reality.
#7
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Honda used to do more with less. Today they do less with more. That sums it up nicely.
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#8
http://www.vodcars.com/fastlanedaily/
I thought it was during day 1 or day 2 of the NY auto show.
I scanned both episodes and did not find it.
I thought it was during day 1 or day 2 of the NY auto show.
I scanned both episodes and did not find it.
#9
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When I went to the auto show back in November I remember one guy who banged his head pretty good getting into the back of the zdx and he cursed and complained the whole time, at that time I thought to myself Honda/Acura has failed.
#14
Lexus Champion
It's sad that Honda has lost it's way. First it was the sea of buttons which comes standard on pretty much all Hondas, then came the Acura beak and the crazy (aka ugly) TL redesign, then the ZDX/Crosstour. The current Civics aren't that bad, but I'm sure they'll find a way to screw that up. They'll probably add a whole lot of buttons to the center stack to keep it in line with the other Hondas.