May was a disaster for American new car sales. Practically every player in the U.S. market ended-up the month trailing last May's totals, many by a significant margin. Perhaps the most damning indicator of the industry's general direction: the F-150's sudden and precipitous drop from the top sales spot. Ford's full-size pickup wasn't just edged out; it was defenestrated by four different cars. The Civic, Camry, Accord and Corolla all mounted the Mother of All Palace Coups. With gas prices singing "the only way is up," clearly, May is only the start of a long, hot, bloody summer.
Trucks
Overall light truck sales fell 24.5 percent from last May. The Chevrolet Silverado* led the drop in pickup truck sales, down 42 percent in May, down 25.9 percent year-to-date (YTD). The Dodge Ram slid by 37 percent for the month, 26.8 percent drop on the year. Ford's F-Series' tumble from the top of the U.S. sales chart was appropriately dramatic: down 30.6 percent in May and 18.7 percent from the first five months of last year. The Toyota Tundra turned-in its first negative month last month. May saw no respite (obviously); ToMoCo's full-sizer finished the month down 31.5 percent. Strong sales earlier in the year have kept it above the red line year to date; sales are still 8.5 percent ahead of last year.
Truck-Based SUVs
Traditional SUVs are dying, with one notable exception. Chevy's Tahoe* continues its fall from grace, dropping 39.7 percent in May, 29.9 percent YTD. The Dodge Durango has just about disappeared from view, "boasting" a 68.8 percent drop in May, down 44.2 percent for the year. The once all-conquering Ford Explorer is barely selling. Sales are down 41.2 percent in May, negative 28.7 percent for the year. Interestingly, the Toyota Sequoia is up 81.7 percent compared to last May, up 29.4 percent TYD. It's already outselling the Durango. If these trends continue, by the end of summer, Sequoia sales could easily eclipse the Explorer and Tahoe.
Crossovers
Here's news: buyers abandoning pickups and SUVs seem to be skipping CUVs and going directly to cars. The GMC Acadia lost the big Mo; sales fell for the second straight month vs. last year. Sales cratered 27.6 percent in May; excellent sales for the first three months have kept it 20.5 percent ahead for the year, though. For the first time, The Ford Edge dropped below the previous year's sales, down 2.6 percent in May. Like the Acadia, robust sales earlier this year have kept the annual sales up; the Edge finished May 26.8 percent ahead of the first five months last year. The Toyota Highlander* and Honda Pilot both finished May below May '07, down 9.6 percent and 16.5 percent respectively. The Highlander is still 1.9 percent up on last year, but so far, the Pilot is 14.4 percent below 2007.
Family Cars
The year of the car is finally here. Almost every mainstream passenger car showed increases in May. Chevy's Malibu* fell slightly from last month, but still ended up 39.1 percent ahead of May '07, up 25.7 percent YTD. The Chrysler 300 was the exception that proved the rule, finishing May down 52.9 percent, 30.7 percent YTD. (Chrysler attributed the drop to decreased fleet and rental sales.) Ford Fusion sales were up 26.7 percent in May, up 10.5 percent YTD. May was the Toyota Camry's best month in 2007. May 2008 saw a 2.3 percent increase on that high water mark; annual sales rose 2.3 percent. The Honda Accord continued its trajectory, rising 37 percent in May, 8.3 percent YTD.
Compacts
Chrysler's bright spot: the Dodge Caliber. Sales were up 6.7 percent in May, 9.2 percent YTD. The redesigned Focus was Ford's biggest grower, jumping 53.2 percent in May, running 35.7 percent ahead of last year. Chevy's Cobalt continued its sales climb, rising 19.2 percent in May, 17.8 percent YTD. The best selling vehicle in May was… the Honda Civic*. Civic sales were up 33.3 percent in May, 20.2 percent YTD. The Nissan Sentra finishes its third straight month of sales increases with a 9.6 percent jump May, 6.9 percent YTD. Toyota's Corolla also had a good showing in May: up 16.8 percent. A slow start on the year means the Corolla's still trailing last year by 8.1 percent YTD.
Subcompacts
Chevy's Aveo sales dipped drastically in February and March but they've increased steadily ever since. It's up 44.3 percent from last May, up 2.3 percent YTD. The Honda Fit made a huge jump, up 53 percent for May and 64 percent YTD. Nissan's Versa rose 14.8 percent from May 07, up 21.5 percent YTD. Toyota Yaris' sales rose 31.5 percent in May and 50.4 percent for the year to date.
Prius
The Toyota Prius turned in a shocking performance in May. In spite of soaring gas prices and consumers' increasingly "green" mindset, sales dropped 37.5 percent in May. Toyota [credibly] blames a shortage of cars on the ground. Regardless, sales are still up 3.8 percent YTD.
By Manufacturer
GM finished May 27.5 percent below last May, down 15.9 percent YTD. Chrysler was down 25.4 percent on the month, 19.3 percent on the year. Ford fared better, with "only" a 15.9 percent drop for the month, 11.2 percent drop for the year. For the fourth month this year, Toyota turned in a sales performance below the same month last year . This time, ToMoCo was off 4.3 percent for the month. They remain 3.5 percent below 2007 YTD. Honda was the only one of the "top five" automakers to finish both the month and year in the black. HoMoCo was up 15.6 percent on the month and, up 4.8 percent on the year.
Total Sales
GM, Ford, Chrysler and Toyota are closing truck plants and scrambling to convert truck lines to build cars– now that they've finally realized that truck sales aren't going to improve any time soon. As the model year starts winding down, you can count on even bigger incentives on trucks and SUVS as manufacturers try to clear out their inventories and make room for the cars everyone wants. Will they all make it to the end of the summer? Good question.
*Sales numbers include hybrid models
Frank, are your sales comparison %s based on daily selling rate (there were 27 selling days in May 08 versus 26 in May 07) or just absolute numbers? GM reports them both ways, Toyota only reports DSR % changes, and most of the others reported their numbers in terms of the absolute % change. The Acadia is worrying for GM; I wonder how much of it could be due to the local strike at Lansing Delta Township? Days' inventory actually went down from 4/1 to 5/1 from 57 days to 54 days. Enclave's inventory went from 40 to 38, while the Outlook dropped from 101 to 96. This tells me that it was probably a supply issue, since we know they didn't make them for a few weeks, yet inventory rates went down.
The percentages are based on total sales reported for the month compared with total sales reported for the same month in the previous year. They do not use daily sales rates or any of the other smoke and mirror tricks the manufactures use to try to make their numbers look better than they really are.
YTD sales are the total sales from January 1 through the end of the referenced month.
A few years ago, Charlie Baker – Honda’s Chief Engineer in the US, stated that a good company doesn’t ask its customers what they think of the company’s philosophy, it just follows it.
In Honda’s case, the very sensible philosophy of providing the best fuel performance in each category, with environmentally friendly vehicles.
Doesn’t Bobby Lutz wish he’d had that brainstorm?
Bobby Lutz did have a brainstorm: “Let’s do a total redesign on the full size SUV! Think of all the money we’ll make!”
If I were a GM stockholder and watched these bozos pour more money down the SUV/CUV rathole while soldiering on with the Impala and its Buick/Pontiac twins, I’d be looking for Wagoner’s head on a stick.
They paid this guy $14 million last year?
Except Stein, that Honda doesn’t produce the “best” fuel economy in every category (they are of course usually near the top) and what car is really environmental friendly.
Honda may be a good choice for a lot of people, but they aren’t that much better than most of their competitors.
The best advice for auto execs is to build vehicles that people want and can trust.
The large CUV drop doesn’t surprise me in the least. Those that do the research are finding they don’t get much better mileage than the SUV they replace.
The fact the Acadia/Outlook have that much stock tells me supply isn’t the issue for sales. I think people are finally seeing that the large CUV is not saving enough gas to be worth while.
Time for the industry to axe the Daily Selling Rate (DSR). All dealers are open Saturdays and most are open on Sundays now with a small exception of the few areas where the blue laws still somehow survive.
One noteable is the Corolla contains the Matrix sales as they do not break them out and both are new models.
Honda’s philosophy entrenched from its late founder has been do less with more. Push the envelope for both power, performance, and efficiency. Their lineup consists of frugal yet fun to drive vehicles to lightweight and fun sports cars with small engines, to various forms of two wheel transport. Then look into Honda’s past and its direct and unwavering committment to racing and how they swap production engineers into racing programs and back again is a testament to their engineering prowess and why a lead engineer position at Honda is highly coveted. Also note that its BOD and upper management and all its CEOs were all engineers by trade (not marketing or accountants).
Toyota took a bit of a hit this month, but I don’t think there’s any concern yet.
As we’ve established before, Toyota will just flip their truck plants to make more Camries and Corollas. They might even make Priuses in the US to increase supply to the rest of the world. Any excess trucks can be shifted with heavy incentives. Toyota can afford this with their deep pockets.
Honda isn’t that truck/SUV dependent so, their increase in sales is hardly surprising.
However, Nissan is curious. I found out the other day that Nissan is transferring production of the Nissan Micra from the UK and replacing with a small SUV/CUV based vehicle. Now if, I’ve got this right Nissan Europe’s line up will be:
Micra New small SUV/CUV
Note: Small CUV
Qashqai: Medium CUV
Murano: Big CUV
Patrol: Medium SUV
Pathfinder: Big SUV
X-Trail: Big SUV
Nissan Europe’s line up will not have a small city, a small family hatchback or a family sized saloon any more. My point is, pay attention to Nissan NA’s line up because Nissan Europe are very quickly losing the plot.
As for Detroit, it really doesn’t look good for them. Ford still may pull themselves out of the hole as the majority of their sales drop came from trucks and SUV/SUV’s. If Ford can now focus selling their cars more profitability, then Ford will no longer be a concern for Detroit.
GM, however, is almost gone. I think the closure of 4 truck plants is too little, too late. By the time the effects of their closure and paying off employees starts to happen, GM will probably be in chapter 11.
Chrysler? Well, don’t get too attached to them, they won’t be around for long…..
No mystery on the Prius… Toyota’s capacity for US Priuses is 15K/month. Over the past few months, they were selling well above that rate and drew down inventories. This month, they simply sold them as they rolled off the boat, starting and ending with little in inventory.
Look for long lines at the Prius counter at your nearby Toyota dealer to continue until Toyota gets more Prius capacity on-line. I believe they plan to just about double Prius capacity for the 2009s.
I sure hope so. I hate to wait.
About the Malibu… is there any way to tell how much of that is going to fleets? And if that’s including the “classic” version? My impression is that Chevy is selling the “classic” version to fleets and the updated version to the general public.
And if the Cobalt and Aveo are climbing, then the accelerating appetite for fuel efficient cars these past couple months is truly overwhelming other factors.
Katie said, “Nissan Europe’s line up will not have a small city, a small family hatchback or a family sized saloon any more.”
What the heck is (“are” in the UK) Nissan smoking? I can’t imagine why Nissan would cede those market sectors to the competition.
Frank said his percentage calculations “do not use daily sales rates or any of the other smoke and mirror tricks the manufactures use”
DSR seems like a reasonable method to me, but it’s my impression Saturday is the biggest sales day of the week. Is that correct? If so, then the number of Saturdays may be more important than number of selling days. May 2008 had five Saturdays; May 2007 only four. If that significantly influences sales, then the industry is in even worse trouble.
Some of the smaller manufacturers – the ones who don’t rely as heavily on trucks – are seeing gains. Mazda, Subaru, and Nissan are all up. The Forester was up 66% in May from May 2007. Of course, they still only sold 6412 of them last month, but hey. The Mazda5, CX-9, and Tribute have all seen big jumps for Mazda, but they’re still a very small part of the total market. The Mazda3 had a slow start to the year but it’s making up ground in a hurry.
I think small crossovers – what we used to call station wagons – are set to take off as part of the shift back to cars. Most of them don’t hold any more people than a sedan, but they do hold more stuff. The hatchback of the future is a tall, small wagon.
kph
About the Malibu… is there any way to tell how much of that is going to fleets? And if that’s including the “classic” version? My impression is that Chevy is selling the “classic” version to fleets and the updated version to the general public.
GM is pretty tight-lipped on fleet sales. All they’ll say is that they’re cutting fleet sales. They no longer offer the Malibu “Classic” but now have a “Malibu Fleet” which is based on the current Malibu. They also offer the “regular” Malibu for fleet sales.
edgett :
June 12th, 2008 at 9:43 am
If your argument for the domestics being total morons is based on the fact that they revamped an (at the time) profitable vehicle line and failed to realize that gas was going to double price in two years, I’d love to hear your assessment of an import company that just sunk billions of dollars into a new fullsize pick-up manufacturing plant and is currently leaving sales on the table by failing to upgrade capacity on their hot-selling hybrid.
I know the domestics are total morons, but it wouldn’t kill you to point out that almost every other manufacturer also failed to see this coming.
The domestics were already fucked, and this just makes it worse for them, but you can’t argue that Toyota’s underproduction of Prii and overproduction of Tundras demonstrates their prognostication skills.
I wonder how the sales of small cars across all brands would be different if Honda had more capacity for the Civic and Fit, and Toyota had more for the Prius. For example, why would anyone buy a Cobalt over a Civic or an Aveo over a Fit? Thus as Honda brings the Greensburg plant online and brings their new hybrids to market what will happen to Ford’s hope for the new Focus?
Nissan is probably engaging in a sort of gentlemen’s agreement with Renault to avoid intracompany cannibalization.
The trick will be to see if Renault reciprocates. Somehow, I doubt they’ll swallow their pride.
Frank Williams :
The percentages are based on total sales reported for the month compared with total sales reported for the same month in the previous year. They do not use daily sales rates or any of the other smoke and mirror tricks the manufactures use to try to make their numbers look better than they really are.
YTD sales are the total sales from January 1 through the end of the referenced month.
Thanks for clarifying your methodology. FYI, DSR is not a smoke and mirror trick – it allows consistent comparisons from month to month. If May 2007 had an extra Sunday (therefore not a selling day) than May 2008, then the May 2008 comparison would suffer from using DSR.
Take GM for example; they sold 272,363 units in May 2008 and 375,682 in May 2007. In absolute terms, that is a 27.5% reduction. But in terms of DSR, because May 2008 had 27 selling days and May 2007 had 26 selling days, the May 2008 rate was 10,088 per day (272,363 / 27) and the May 2007 rate was 14,449 per day (375,682 / 26). The DSR comparison means a 30.1% reduction instead in terms of DSR. So DSR only helps the comparison for months when there were fewer selling days in the more recent month.
Sure, DSR becomes a moot point on the longer timeframe comparisons like YTDs or annual figures, but in this case, the May results sucked even worse because in an extra day to move metal, they still fell almost everywhere.
@SkiD666
Sorry, but even DetNews disagrees with you.
This article ran yesterday. I have been following this for years.
Honda’s fuel-efficiency strategy pays off
Christine Tierney / The Detroit News
In recent years, while many automakers were building bigger and brawnier trucks and SUVs, Honda Motor Co. stuck to its core business of making fuel-efficient vehicles. Unlike its leading Japanese rivals, Honda passed on developing a full-size pickup. It didn’t offer a powerful V-8 engine for its premium cars and SUVs either, focusing its resources instead on designing better versions of its stalwart Civic compact and tiny Fit.
That strategy is now paying off. This year Honda has clocked the best performance of any major player in the U.S. market. Its sales are up 4.8 percent in a market that contracted 8.4 percent in the first five months of 2008. In May, the Civic became the top-selling vehicle in the United States, displacing the longtime champion, Ford Motor Co.’s F-Series trucks, as consumers traded in gas guzzlers for more frugal models.
http://www.detnews.com/apps/pbcs.dll/article?AID=/20080611/AUTO01/806110389
Frank Williams:
GM, Ford, Chrysler and Toyota are closing truck plants and scrambling to convert truck lines to build cars– now that they’ve finally realized that truck sales aren’t going to improve any time soon.
Just a clarification: Toyota is NOT closing truck plants. If you’re referring to the Indiana or the San Antonio plants, well Toyota is simply changing production ratios, not closing any lines or plants. Toyota is flexing its vaunted flexible manufacturing muscle (no pun intended) and will likely build more Camrys at Indiana, while building less trucks and Siennas. Toyota’s San Antonio plant is also very flexible, and if need be can be reconfigured to produce other models.
Closing plants goes against Toyota’s corporate philosophy. It would be a huge waste in Toyota’s view to close a plant. They would much rather reconfigure the plant to produce something else, and they’ll even spend money to revamp older plants in order to do just that.
SkiD666:
Except Stein, that Honda doesn’t produce the “best” fuel economy in every category (they are of course usually near the top) and what car is really environmental friendly.
Correct. In many vehicle categories, the competition has better fuel economy than Honda.
The economic downturn plays to Honda’s strengths, but the lack of diversity within the product line is also a long-term negative.
Unless they can create brand equity for Acura (and based upon the upcoming TSX, I have my doubts about them ever sorting out the value of the brand), they will be less in a position to benefit from the eventual economic recovery than the more diversified companies like Toyota.
It’s not quite this bad, but it is a bit like Ford and GM during the nineties when they were benefiting from having SUV’s dominate their lineups. It was good for awhile because they were playing to a niche market full tilt and were squeezing it for all that it was worth, but that same skewing came back to bite them when the market turned against them.
Over the long run, I’d say that Toyota is in better shape. The economy is good more often than it is bad, and they are well positioned for the good times. Honda has strong offerings in certain segments, but they don’t cover enough segments to get the benefit of that recovery kicker when it’s time.
Let me elaborate on Charlie Baker’s point.
More than a decade ago, Honda decided to follow two rules: Most fuel efficient in each category; environmentally friendly.
And they stuck with it, even passing on developing a full sized pick-up. Here’s the link from DetNews again:
http://www.detnews.com/apps/pbcs.dll/article?AID=/20080611/AUTO01/806110389
Yes – they don’t lead in every single category, but when they’re not at the top, they’re close enough for a cigar.
And that’s why Hondas are outperforming now, as this is what buyers are focusing on. Friends and neighbors tell prospective buyers to go to Honda, and Honda reaps the benefit.
By not diluting their position – their philosophy as Baker put it – they have become the clear choice. In contrast to the rest of the carmakers, Toyota included, who couldn’t resist building more than a couple of big and thirsty cars, for show.
I’m personally quite pleased to see this happen, as I’ve been using the Honda example in lectures and client meetings since 2002, as illustration of what it takes to establish and gain long term brand benefits from sticking to a strategy that is relevant to consumers’ concerns, and not just to the carmakers’.
Good for Honda.
For the “reducing fleet sales” we keep on hearing from GM or Ford – there are 2 fleet avenues that happen. One is factory direct yet another avenue is fleet sales through dealers. Fleet sales are only counted from the factory and all fleet sales through the dealer are considered retail. This makes it suspect that the main reason we keep on hearing from the D2.8 are “reducing fleet sales” when they may not be doing so but using partial fleet sales to pad retail sales. They won’t break out final registrations so there’s no way to know except take their word for it – and we all know how good their word is.
Here’s Charlie Baker back in 2005, in Newsweek, explaining why they are so obsessed with their fuel efficiency.
http://www.newsweek.com/id/50235
Back in 2005, Honda already had 7 of the 10 most fuel efficient vehicles, according to the EPA.
The article linked is interesting. I’m sure Lutz laughed at it, the way a group of GM executives I was with laughed at Honda’s small cars in a car show – stating that building such small cars would be a career dead-ender at GM.
Despite the megawatt buzz about the Toyota Prius, Honda actually tops the charts for fuel economy among auto-makers in America. Of the 10 best gas misers on the road today, Honda has seven of them, according to the EPA.
And that’s why Hondas are outperforming now, as this is what buyers are focusing on.
That is the problem. They are fairly heavily weighted toward a particular state of the economy and a specific consumer taste. That is similar to what the domestics had in their sales pipeline before they started going down in flames.
Now, it isn’t quite that bad for Honda, because they have avoided a lot of the other organizational drawbacks that have been evident among the Big 2.8.
Still, the lack of product diversity is not a plus over the long run. When people are ready once again to buy luxury cars and trucks, Honda will not be there. Those are cyclical products that earn a lot of money when times are good. The economy goes in cycles, and this one will also rebound in time.
My understanding is that Toyota’s big trucks and SUV’s have a significant higher income demographic than GM’s and Ford’s. That would explain Sequioa sales.
Psych101, you are correctomundo re: Honda.
Being the “unofficial automotive historian” around here, I’m going to point out that Honda is in the same, very good position that American Motors (Rambler) was in 1961.
Rambler brand out-sold the “usual” #3 brand, Plymouth, that year – which, coming from a company which was as good as dead 7 years earlier during the huge Ford vs. GM “ship unordered cars to the dealer” fiasco where Ford tried to overtake GM and GM fought back likewise (nearly destroying all of the “independent” automakers and Chrysler, too) – was miraculous. Rambler was #4 in 1960, a year when the big-3 introduced their “compacts” to compete – and yet Rambler managed to sell 458,841 cars, and 377,902 in 1961 (a “down-sales” year).
When sands shifted (as they always do), Rambler went from #3 in the entire industry – biggest auto market in the world – to 9th place a mere 5 years later, 295,897 cars. That’s because they a) did not have a full line-up to compete across the board (being too small to) and b) concentrated on “sensible shoes” cars and by the mid 1960’s, “sensible” was OUT, muscle cars were IN, and Rambler owners were fuddy-duddys.
Could happen to Honda, but I hope not. I have not yet owned a Honda, but hope to some day, because they’re seemingly a great auto company and I actually like high MPG, and have since 1973. I guess I’m just an early adopter.
(Ironically, my very first car in 1973 was a 1966 Rambler).
Stein X Leikanger:
In contrast to the rest of the carmakers, Toyota included, who couldn’t resist building more than a couple of big and thirsty cars, for show.
Toyota also “couldn’t resist” building the Prius and other hybrids, single-handedly making hybrids a new segment in the market. Meanwhile, ever since Honda came out with the Insight they did very little to follow through after that and in a way almost didn’t care or didn’t focus on hybrids for a few years. Now with the stunning popularity of the Prius, Honda (like GM and others) is being forced to put a lot of focus onto hybrid vehicles.
Yes Honda deserves credit for having such a fuel efficient lineup, but when you dig deeper you find it’s because Honda doesn’t have very many large, fuel-thirsty vehicles.
As Pch101 stated, Honda’s lineup lacks diversity as it’s focused on smaller, less powerful vehicles. Honda doesn’t even have a V8 in the market, a big no-no in the truck segment and luxury segment. It’s no surprise why the Ridgeline is a sales dud, or why Acura continues to flounder in the luxury market. Having no V8 is a big reason for that.
TThen you look at Toyota. According to government ffigures, Honda is *overall* the most fuel-efficient car company in America, closely followed by Toyota. What’s impressive about Toyota though is that they sell a variety of large vehicles, as well as V8-powered vehicles. Even with that in mind, Toyota almost manages to equal Honda in overall fuel efficiency (average among all vehicles sold by the company).
If Honda sold V8s or large vehicles like full-size trucks and SUVs, I can almost guarantee that their overall fuel efficiency would be behind Toyota.
Honda is getting a lot of credit for their fuel efficient lineup because of the market conditions, and also by virtue of just being “there”. Honda has always made small, relatively fuel-efficient vehicles. It was true in the 1960s, and it’s still true now. Thing is, Honda doesn’t know how to build anything else. One reason why Honda’s lineup lacks diversity is because small, fuel efficient vehicles is all the company knows for the most part. Honda first and foremost is a motorcycle maker and engine builder, and these roots are quite obvious when looking at their lineup. Toyota’s roots as an automaker were building military vehicles and city cars. Toyota from the very beginning as an automaker had a diverse lineup.
Honda’s lineup just isn’t that diverse because the company hasn’t grown and matured enough from being more than a simple motorcycle or engine maker that happens to also build small vehicles. That is one reason why Honda, like all other competitors, was caught twiddling its thumbs when the Prius became popular and Toyota achieved an image/reputation boost from its hybrid dominance.
Mj0lnir :
June 12th, 2008 at 11:28 am
I couldn’t agree more about Toyota’s pickup folly. Yet they poured billions into a bet while still holding three kings in their hand. GM was drawing to an inside straight. If their bet failed, they had virtually no backup, whereas Toyota still has the Camry, Corolla and all of the variants.
This is a longstanding issue. In the 70’s, GM was quite satisfied to cede the small car market to the import guys, stating over and over that “No one makes money on small cars anyway.” As the SUV boom began to take hold, D3 once again made a concession, this time saying that “We make lots of money on trucks. Let the import kids fight over who buys cars.”
And whether gas prices would climb precipitously, any fool could see that no matter what, a strong car range was necessary to provide profits in any market. Unfortunately the overpaid fools in Detroit chose to ignore this.
To throw in another factor on “why Honda is hot”, they have also been very consistent on reliability.
In the last few years not a single Honda has dipped below the industry average in CR’s surveys, most well above.
Zip, Nada, None.
So…here we have a company that delivers consistently high mpg, consistently high reliability and their product design is always at or near the top in each category.
I think they’ll be OK. BTW, saw a chart a few years back of their growth in America, steady slow growth for decades regardless of the economy and vehicle fashions.
Bunter
Hey Frank,
How about a market share chart?
Didn’t Honda pass Chrysler and Toy get pretty close to GM?
Bunter
Honda seems to be the biggest winner in the small car wars. Civic and Fit are dominating their classes and their classes are suddenly where the action is.
Aveo is a piece of junk, and now that the market is focused on small cars the junkiness gets it’s due.
GM is hosed. They have exactly ONE competitive car, the Malibu. One. Out of a more brands and nameplates than a person can count. One. Nice job Lutz!
@Johnson
Toyota also “couldn’t resist” building the Prius and other hybrids, single-handedly making hybrids a new segment in the market. Meanwhile, ever since Honda came out with the Insight they did very little to follow through after that and in a way almost didn’t care or didn’t focus on hybrids for a few years. Now with the stunning popularity of the Prius, Honda (like GM and others) is being forced to put a lot of focus onto hybrid vehicles.
Johnson, you won’t find a stronger Toyota fan than me here – check out my editorials on that carmaker, including the one where I reported on driving the prototype generation 2 Prius at their test track by Mount Fuji.
Just making the point that Toyota, in spite of their foresight with Prius, couldn’t resist building a large, very large truck.
https://www.thetruthaboutcars.com/toyota-the-way/
ChrisHaak :
Thanks for clarifying your methodology. FYI, DSR is not a smoke and mirror trick – it allows consistent comparisons from month to month. If May 2007 had an extra Sunday (therefore not a selling day) than May 2008, then the May 2008 comparison would suffer from using DSR.
That would work if all dealerships were closed on Sunday. However, I’ve lived in many places where the dealerships were open seven days a week. That means they sell cars on days not included in the “selling days” the manufacturers like to brag about. This drives up the sales per “selling day” in the EOM computations when actually there were just more selling days. Also, when dealerships are open 7 days a week, the “this month has X selling days and that one has Y selling days so you can’t compare them” excuse no longer holds water. The only time the number of days might be a valid arguement would be in comparing a 30-day month to one with 31 days. And if you’re going to compare based on how many days a week delalerships are open, why not go even further and base it on how many hours they’re open during a day? After all, a dealership that’s open 15 hours per day has longer selling days than one just open 12 hours.
Johnson
Just a clarification: Toyota is NOT closing truck plants. If you’re referring to the Indiana or the San Antonio plants, well Toyota is simply changing production ratios, not closing any lines or plants. Toyota is flexing its vaunted flexible manufacturing muscle (no pun intended) and will likely build more Camrys at Indiana, while building less trucks and Siennas. Toyota’s San Antonio plant is also very flexible, and if need be can be reconfigured to produce other models
And in the meanwhile they’re dragging their feet on building and opening the truck plant in North Mississipi.
Good article and all; I like to see that Americans -maybe- are starting to get it.
Can I ask a favor, though? Please don’t refer to Honda as HoMoCo, OK? It’s difficult enough to look manly in a Fit as it is.
psarhjinian :
June 12th, 2008 at 11:32 am
Nissan is probably engaging in a sort of gentlemen’s agreement with Renault to avoid intracompany cannibalization.
This has to be it. Nissan makes the SUVs, Renault makes the cars. I imagine Europe would be the only market where the two would really have to compete against each other hard.
Some of Toyota’s sales oddities here are explained by redesigned models. That is, the Corolla is down YTD because there was a new version released a couple months back, meaning that supplies of the old model were low for the first few months of the year. The opposite thing happened with the Tundra; Tundra sales are still up YTD because sales early in 2007 were minimal, waiting on the redesigned model. And the Sequoia is brand spanking new (based on the new Tundra), explaining it’s sales rise compared to last year.
Frank Williams :
That would work if all dealerships were closed on Sunday. However, I’ve lived in many places where the dealerships were open seven days a week. That means they sell cars on days not included in the “selling days” the manufacturers like to brag about. This drives up the sales per “selling day” in the EOM computations when actually there were just more selling days. Also, when dealerships are open 7 days a week, the “this month has X selling days and that one has Y selling days so you can’t compare them” excuse no longer holds water. The only time the number of days might be a valid arguement would be in comparing a 30-day month to one with 31 days. And if you’re going to compare based on how many days a week delalerships are open, why not go even further and base it on how many hours they’re open during a day? After all, a dealership that’s open 15 hours per day has longer selling days than one just open 12 hours.
Valid point, however there are plenty of dealerships that ARE closed on Sundays and holidays. Also, DSR does not inflate either absolute sales numbers (sold 13,000 units this May versus 15,000 last May) or month-over-month percent change unless the DSR was lower in the later month. I wouldn’t say they’re really gaming the system unless they are applying it inconsistenly. But since DSR % change was worse in May 2008 than the absolute % change, DSR actually hurts anyone who uses it.
I’d never compare a 30 day month against a 31 day month because that would mean you are comparing two different months, then the numbers would be at the mercy of annual cyclical buying patterns (i.e. more convertibles in warmer months, more 4x4s in cooler months). So maybe only February in a leap year vs. a non leap year would warrant DSR? :)
One thing is for sure, the math is easier when using the absolute number versus DSR.
BTW, I used the absolute numbers like you did when I did my own analysis of the May 2008 sales results for Autosavant last week…not for any specific reason other than that everyone but Toyota reported the absolute numbers, requiring no conversions on my part.
Ha-ha. I love the “Honda is exposed through its focus on smaller vehicles argument.”
Vehicles will never go back to being as huge as they have been since 1980 – just forget about it. Nor will they be as heavy – and the conception of luxury respective to cars will change significantly in the coming years.
Honda’s present line-up will be replaced by 3-wheeler cars some years down the road. Do try and remember that 75% of all journeys by car in the US, during a day, are made by one person behind the wheel of that car.
Automotion as we know it is as flat out irrelevant as the schooners and barks in a tall-ships graveyard.
http://www.ahrtp.com/TallshipsOnLine/images/3SCHOON-1enhc.jpg
Even if enormous oil reserves are discovered and global warming is proven to be a hoax… does anyone really believe Honda will be in trouble? They’ve been gaining market share for decades, even through the 90’s when gas went under $1 a gallon. I agree Honda is getting somewhat of a lucky break, but when it comes down to it, they make high quality, well engineered cars.
And a full lineup is meaningless if it includes weak offerings. GM has plenty of small car models, they’re just not worth buying.
I never understood all the Honda bashing and Toyota worshipping that seems to go on in the comments here. Gearheads always want to smack Honda for not doing a V8, even when Honda, on a global level, has said that it would never be in their plans to do so. And really, why build a V8 at this point? And for those of you complaining about Honda not building powerful engines, you obviously haven’t driven an 08 Accord V6. They’ve never really cared to take part in the HP wars, despite everyone’s wishes to the contrary. My parent’s new Accord blows their 2001 DTS out of the water on everything, from HP to handling to economy…
Toyota builds roughly similar engines, HP-wise and efficiency-wise, but there’s never any complaints about them, I guess, because they went ahead and made a V8 as well. Makes no sense to me.
And the comparison of Honda to AMC is possibly the most ridiculous thing I’ve ever read on TTAC. Ever. Honda’s philosophy is to provide across the board consistency and quality, and they seem to do so in every model, including Acura (with the exception of the RL, which I just don’t understand in many ways). For example, both the Civic and the TSX are great mixes of everything. They can take an 8 out of 10 in every category from looks to economy to power to handling, and that’s the point – consistency across all the areas.
Toyota obviously accomplishes much similar results on their top sellers, and not much on some of the others. I almost wish they wouldn’t have chased Detroit with a few of their product lines (read: SUV and Truck). Should have just let the big 2.8 crash and burn on their own, and put them further out by not joining in their games…
“Practically every player in the U.S. market ended-up the month trailing last May’s totals, many by a significant margin.”
Honda counts as a major player, and “American Honda Reports May 2008 Best Month Ever; All-Time Record Civic Sales”
http://www.theautochannel.com/news/2008/06/03/088826.html
According to that report, Honda was up 11.6% in May, which is huge considering the overall market.
“I’d love to hear your assessment of an import company that just sunk billions of dollars into a new fullsize pick-up manufacturing plant and is currently leaving sales on the table by failing to upgrade capacity on their hot-selling hybrid.”
Meanwhile, Honda continues to kick Toyota’s butt on decision making, save the odd screw up like the Accord hybrid. Honda dipped it’s toe into the booming SUV and pickup markets with the Pilot and Ridgeline, both of which are spun off the Odyssey platform which in turn was derived from the Accord. No big dedicated BOF investments, and Honda is going to find it very easy to turn excess light truck capacity back into car capacity. Toyota’s new San Antonio plant, on the other hand, is going to be harder to turn into a FWD unibody car factory. It can be done of course. Of the three major Japanese based players, only Honda avoided big investments in ‘merican style trucks and SUVs and now they are benefiting from it.
Honda has been growing and has been consistently profitable in good times and bad, so I don’t buy the argument that when things start looking up, Honda will be in trouble. Yes, they have work to do on the Acura side, but during the last boomlet they sold a pile of MDXs and TLs at excellent profit margins. There is a law of diminishing returns in chasing ever more market segments and we see that at Toyota right now. From reading about the company, Honda’s internal culture seems a bit paranoid in the Andy Grove/Intel sense. They have always had far less money to throw around than Toyota, and as a consequence tend more towards rifle shots than shotgun blasts. Honda started in the car business against the express orders of the Japanese government and had to scrape and scrap at every turn, thus making for a hungry, agressive, yet careful internal culture.
Honda is already a strong #2 inside Japan, having relegate once powerful Nissan to third chair. In the US Honda is likewise the second best selling Asian brand. The battle now is Toyota vs. Honda, much like in the 1950s it was GM vs. Ford.
Pch101: Unless they can create brand equity for Acura (and based upon the upcoming TSX, I have my doubts about them ever sorting out the value of the brand), they will be less in a position to benefit from the eventual economic recovery than the more diversified companies like Toyota.
Another problem with Acura is that the fit-and-finish don’t seem to be any better than what you get in a Honda.
menno: When sands shifted (as they always do), Rambler went from #3 in the entire industry – biggest auto market in the world – to 9th place a mere 5 years later, 295,897 cars. That’s because they a) did not have a full line-up to compete across the board (being too small to) and b) concentrated on “sensible shoes” cars and by the mid 1960’s, “sensible” was OUT, muscle cars were IN, and Rambler owners were fuddy-duddys.
In all fairness, after 1964, Rambler attempted to compete with the Big Three directly (partially because it had no choice after the debut of the Ford Fairlane in 1962 and Chevrolet Chevelle/Pontiac Tempest/Oldsmobile F-85/Buick Special intermediates in 1964).
The Classic was given a V-8 engine option in mid-year 1963, hardtop Classic and Ambassador models debuted in 1964, and both were restyled and given distinctive looks (and the Ambassador was made bigger) for 1965. Convertibles appeared in the Classic and Ambassador lines for 1965 to add some spice. The Marlin fastback – based on the Classic – also appeared for 1965. None of which boosted sales in the long run, although they did run up AMC’s tooling bill.
AMC restyled the “senior” cars again in 1967 with very attractive, “GMish” styling, gave them new rear suspensions…and watched sales fall yet again. By early 1967, the company was almost out of money.
AMC did try to expand its customer base beyond the “Romney” type buyers interested in dull, reliable and frugal transportation, but it just didn’t work.
Stein X Leikanger: Vehicles will never go back to being as huge as they have been since 1980 – just forget about it. Nor will they be as heavy – and the conception of luxury respective to cars will change significantly in the coming years.
In 1980 I remember people saying that a Cadillac Eldorado would eventually be smaller than a Chevrolet Monte Carlo. By 1986 it was, and it flopped, because gas never hit the predicted $3-a-gallon level that everyone was predicting in 1980. For once, GM actually prepared for the worse-case scenario by drastically downsizing its full-size and luxury cars during 1984-86, and took it on the chin.
I also remember people dumping late 1960s Chevrolet Malibu Super Sports, Olds 442s, Dodge Chargers and Plymouth Road Runners, because no one would ever want one of those “old, outdated, muscle car gas hogs.” They were so cheap that my high-school friends could afford them as daily drivers, and I didn’t attend a wealthy school district.
We all know how that one turned out…
As someone once said, “All predictions are dangerous, especially those involving the future.”
Even if enormous oil reserves are discovered and global warming is proven to be a hoax… does anyone really believe Honda will be in trouble?
I can’t speak for everyone, but I’m not saying that all. I’m just saying that when the glory days come back, Honda is going to look pretty mediocre in comparison, and that what is a strength at this moment is going to look like a weakness at that point in time.
Once again, Ford and GM looked wonderful when trucks were all the rage. It may not seem obvious now, but back then, everyone was heaping praises on them for what was actually an extraordinary weakness.
In terms of product skewing, Honda is in a somewhat similar position. Certainly not as bad, but not optimal, either.
Uh, When has Honda looked “mediocre in comparison” in the past 2 decades?
I am suprised Hyundai was not mentioned in the article.
Pch101 “…I’m just saying that when the glory days come back, Honda is going to look pretty mediocre in comparison, and that what is a strength at this moment is going to look like a weakness at that point in time.
My suspicion is that Honda would have no trouble adapting to a world in which it was found that Greenland consisted entirely of frozen oil that we could just break off at will, or that Wal-Mart worked with the Chinese to find ultra-cheap sub-Mongolian reserves equaling all the known oil reserves in the world. Or possibly someone discovers a cold-fusion device which would create an auto market in which it mattered not whether the vehicle weighed one or three tons. It seems dubious that either event will sneak up on Honda or anyone else. Honda has proven in racing that they can build V8’s, V10’s and V12’s which are as thirsty and powerful as virtually anyone elses.
Given that Honda currently manufactures production four cycle engines from one to six cylinders in displacements from 50 to 3700 cc’s (a wider range than any other car company), it seems likely they could put together a thirsty large displacement V8, V10 or V12 should the need arise. The two rear-drive chassis they have built (in addition to scores of both shaft and chain-driven rear-drive motorcycles) have proven to be highly competent, so they can probably handle that front as well. Don’t forget that Ford built a V12 for Aston Martin out of two Duratec V6’s.
Honda Fit – 68% up. Case closed, isn’t it?
Moving on – the trick for carmakers intent on being around in the future is to rethink the driving equation. Right now they are making multi-seater vehicles that are mostly used by one person. Yes, there will be a need for cars for large families, but how many of those do you see these days? Double-Income-No-Kids are more common than the Brady Bunch mom&pops.
So what should be a chief concern for carmakers? To let people keep their range of motion – in other words, to help people retain the freedom cars represent, without the cost of running those vehicles with V8s.
How do you do that? By reducing the size and weight of the cars – significantly. Added benefit: safer motoring in urban areas.
I’m already hearing the – “How are you going to keep trucks and trailers off the roads?” Simple – in some urban areas they’re already being restricted to nighttime driving — and then there are the mega-trailers, the roadtrains that engineers are working on, which will also be creatures of the night as more efficient logistics replace the need for the mobile truck army presently rolling on US roads. (1.8 million trailers – simply ridiculous.)
We’re in the midst of major changes to how we use vehicles. We could have planned for it sensibly, but we’re having it forced upon u by circumstances beyond our control.
Enjoy Michael Klare’s latest scribe: Pentagon as Energy Insecurity Inc:
http://www.tomdispatch.com/post/174943/michael_klare_the_pentagon_as_energy_insecurity_inc_
Uh, When has Honda looked “mediocre in comparison” in the past 2 decades?
http://finance.yahoo.com/echarts?s=TM#chart1:symbol=tm;range=5y;compare=hmc;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
Uh, assuming this link works, it’s pretty clear. This compares the stock values of Toyota and Honda during the economic boom. Toyota clearly outperformed Honda as an investment.
Also, if you compare at net income as a percentage of gross revenues over the last three years, you can see that Toyota netted 6.3%, 6.5% and 6.9% during 2005, 2006, and 2007, while Honda netted 5.6%, 6.0% and 6.3% over the same periods.
In other words, for every dollar that each of them takes in, Toyota is able to generate profits that are about 10-20% higher than Honda can. By these metrics, Toyota is a more efficient operator. In most businesses, efficiency is good.
@geeber
There’s no thing dumber than trying to predict the future, it always turns out differently. But people really should sit down and think thoroughly, trying to rid themselves of the wishful thinking factor that’s gotten low-cost airlines into trouble, and that has sunk Detroit.
Legions of advisers have been telling the LCCs and Detroit that the price of fuel was going to drop, because they knew that’s what their clients wanted to hear. But the price just keeps rising, and rising – leading to the suspensions of flights we’re seeing, the grounding of aircraft that are fuel inefficient, and to the dire prognostications of Airbus and Boeing, who now see their businesses threatened.
As to Detroit? That’s what this editorial is all about.
mel23: I wonder how the sales of small cars across all brands would be different if Honda had more capacity for the Civic and Fit, and Toyota had more for the Prius
I suspect Honda would sell upwards of 30-50k Fits per month if they had em. Same with the Prius.
[i]Kixstart
No mystery on the Prius… Toyota’s capacity for US Priuses is 15K/month. Over the past few months, they were selling well above that rate and drew down inventories. This month, they simply sold them as they rolled off the boat, starting and ending with little in inventory.
Look for long lines at the Prius counter at your nearby Toyota dealer to continue until Toyota gets more Prius capacity on-line. I believe they plan to just about double Prius capacity for the 2009s.[/i]
This is exactly what I have heard as well from colleagues looking for a Prius. The HR manager for my market area just bought a Smart, after looking for a Prius and was told the wait was 10 months.
Just making the point that Toyota, in spite of their foresight with Prius, couldn’t resist building a large, very large truck.
Toyota couldn’t resist, because their goal is to be a full-line automaker, and to try and offer vehicles that fit all buyers and all demographics. An extremely ambitious and risky goal to be sure, but one which they continue to move towards. Adding a full-size truck was just another step in reaching that goal.
Tundra sales, like all truck sales are in trouble, but let’s also not forget the redesigned Tundra now has a bigger slice of the truck market pie than the old Tundra ever did. Also, Toyota still makes a heck of a profit on each Tundra sold; they just now sell less of them.
The Tundra is now firmly entrenched in the truck market. It took considerable cost for Toyota to do it, but in the end, not only is it part of their goal of being a full-line automaker, it is also a move which did not cost them all that much, relatively speaking. Given Toyota’s massive profits and enormous war chest of cash, even if the new Tundra was a complete flop (which is was not) and even if Toyota gave away Tundras for free (which it did not) it could still absorb all those costs as well as the costs of building the San Antonio plant. For Toyota, the costs of the new Tundra were insignificant given that it helped further them along their path of reaching a long-term goal.
Toyota will often take short-term pain in order to achieve long-term gain. In this case, the short term pain of the truck market right now as well as the considerable costs of the Tundra redesign and new model. The long-term gain is progress to reach one of their goals, and also to have a firm foothold (reputation, loyalty) in the truck market for the future.
In summation, I agree with you for the most part, but I simply fleshed out my thoughts on the matter.
Frank Williams:
And in the meanwhile they’re dragging their feet on building and opening the truck plant in North Mississipi.
Which has what exactly to do with closing plants? There is no evidence that Toyota is planning to close plants.
The Mississipi plant has been delayed because Toyota wants the plant opening to coincide with the Highlander MMC, which makes sense. Even if that’s not the real reason, delaying a plant opening is far different from closing plants.
Ronin317:
And really, why build a V8 at this point?
To diversify, have a presence, and be taken seriously in other segments of the market, like trucks and the luxury segment? Just a thought. Unless of course expanding and diversifying isn’t a goal or ambition of Honda, in which case one must ask, what exactly *IS* Honda aiming for/to be in the future? A quasi-niche automaker that ONLY offers smallish vehicles? If I’m looking to buy a work truck, or an off-road vehicle for example, Honda has NOTHING to offer. If I’m looking for a roomy hybrid, Honda once again has nothing to offer.
I’m very curious as to how all of the “Honda doesn’t need a V8” supporters will respond if and when Honda actually offers a V8 in a production model. Further, Honda and Acura owners themselves have been asking for a V8 engine for years and years. If Honda isn’t willing to listen to it’s OWN customers, then who is Honda willing to listen to?
John Horner:
Meanwhile, Honda continues to kick Toyota’s butt on decision making, save the odd screw up like the Accord hybrid.
I beg to differ. Toyota’s decision to invest in hybrids in the early 1990s remains to this day one of the best automotive decisions made in the past 10-20 years. Then there is the difference in decision-making that Toyota and Honda took with respect to the luxury market. Despite Acura coming to market first, Honda messed up with its decisions and after more than 20 years on the market, Acura remains a North American brand that has a floundering reputation, while Lexus is now a worldwide luxury brand with far more image, prestige, and an excellent reputation.
John Horner:
Honda has been growing and has been consistently profitable in good times and bad, so I don’t buy the argument that when things start looking up, Honda will be in trouble. Yes, they have work to do on the Acura side, but during the last boomlet they sold a pile of MDXs and TLs at excellent profit margins. There is a law of diminishing returns in chasing ever more market segments and we see that at Toyota right now. From reading about the company, Honda’s internal culture seems a bit paranoid in the Andy Grove/Intel sense.
Just like Toyota. FYI, Toyota has not had a loss in over 50 years. Yes, that means Toyota has had over 50 years of consecutive profits.
Toyota is most famous for having a paranoid corporate culture resembling Intel and Andy Grove, NOT Honda. Honda is famously known for having innovative thinking and clever engineering solutions. Honda is also known for having a very proud (and stubborn) senior executive team.
Toyota’s quality slip in recent years culminated to Toyota’s CEO himself bowing and apologizing to the media in Japan. Honda’s CEO, or any other Honda senior executive would never do that because they are too proud of themselves.
Toyota’s paranoia also extends to how much they listen to the marketplace and to vehicle owners. While Honda typically tends to use a “one size fits all” approach to regional differences in markets, Toyota uses a much more localized approach. Toyota is paranoid about pleasing its customers, which leads to Toyota having the highest owner loyalty rate in the industry. Honda on the other hand tends to do what THEY feel is right, as opposed to what the market wants. Honda’s ignorance and dismissal of owners asking for a V8 engine is big example, as is the related example of owners asking for a RWD Acura sedan for years, and Honda so far ignoring those pleas.
Let me state I have a lot of respect for Honda and I used to be a big owner and Honda fan. Their products in recent years have made me lose interest, but I still hold some respect for the company and all that it’s achieved. I however have no illusions about the stubborn and proud nature of Honda’s senior executive team, as compared to the paranoid nature of Toyota senior executives.
Let me finish by stating this: a shotgun blast carefully aimed produces much more damage and impact than a rifle blast of equal accuracy. Toyota is very careful and often precise with it’s shotgun blasts, so when Toyota does pull the trigger, the impact is always a big one.
edgett:
Given that Honda currently manufactures production four cycle engines from one to six cylinders in displacements from 50 to 3700 cc’s (a wider range than any other car company), it seems likely they could put together a thirsty large displacement V8, V10 or V12 should the need arise.
Incorrect. Although I don’t know what the real answer is for sure, I think that Toyota produces a wider range than other manufacturers. Toyota makes engines as small as 660cc (Daihatsu mini-car engine) all the way to
20,781cc (heavy-duty Hino diesel engine). They make engines from 3 cylinders all the way to 12 cylinders. Toyota also makes engines in a variety of architectures, ranging from OHV, OHC as well as Inline and V engines.
Stein X Leikanger: Yes, there will be a need for cars for large families, but how many of those do you see these days? Double-Income-No-Kids are more common than the Brady Bunch mom&pops.
There aren’t many large families (which I define as having more than three kids, plus the parents), although I note that the local paper ran a story on the new trend among more educated, younger couples – having three, as opposed to two, children.
Also note that America has a higher fertility rate than most western European nations, where the big concern is that population is poised to begin declining. This is particularly true in Germany and Italy.
And do those double-income-no-kids households include older couples whose children have grown and left to get married, or moved out on their own? They aren’t necessarily going to want to give up at least four-passenger capacity (to carry around the grandkids).
Stein X Leikanger: By reducing the size and weight of the cars – significantly. Added benefit: safer motoring in urban areas.
The only problem is that government safety regulations, coupled with customer demands for “five-star crash ratings” drive up weight. Also driving up weight are customer demands for reduced levels of noise, vibration and harshness, which require a stiffer structure (more weight) and more sound-deadening material (even more weight).
Stein X Leikanger: Legions of advisers have been telling the LCCs and Detroit that the price of fuel was going to drop, because they knew that’s what their clients wanted to hear. But the price just keeps rising, and rising – leading to the suspensions of flights we’re seeing, the grounding of aircraft that are fuel inefficient, and to the dire prognostications of Airbus and Boeing, who now see their businesses threatened.
After peaking in March 1981 (a figure that was only surpassed, in inflation-adjusted dollars, very recently) gasoline prices DID decline throughout the 1980s and 1990s. In March of 1981, I was paying $1.30 for a gallon of unleaded (in 1981 dollars); at the turn of the century I was paying about $1 for a gallon of unleaded (in inflated 2000 dollars!).
For those of us who have been driving for years, stagnant or declining prices WERE the norm. What is happening now is the aberration, which is why it is such a shock.
There’s no thing dumber than trying to predict the future
That’s exactly why having a diversified lineup of strong products is a good idea. When it is possible to produce for any market, the company will make money.
The most returns are to be made in the higher dollar vehicles. They produce more margin and higher absolute dollar returns.
You can see this in the chart above and in the financials. The reason that Toyota typically outperforms Honda is that it has high dollar products such as Lexus to juice very high returns out of products that can borrow from the other vehicle lines.
Here’s the basic outcome: Toyota is positioned to do well during good times, and just so-so during bad times. Honda is positioned to do pretty well during good times or bad, underperforming Toyota during the good and outperforming during the bad.
Typically speaking, times are good more often than they are bad. That makes Toyota’s long term position stronger than is Honda’s, because Toyota’s strategy is more profitable most of the time. It isn’t now, when things are in a nosedive, but usually so.
Honda does not excel in these high dollar segments that would juice its returns during good times. Companies gain from those nice bursts of earnings during the good times in order to get them through times the leaner times, when they can live off of their fat and plan products for the next recovery.
It’s a bit ironic to indict Toyota for long-term product planning, when we simultaneously criticize the domestics for failing to plan for the long term. When the market comes back and Toyota is pumping fat profits with Lexus and the like, Honda will be cruising and watching that market pass it on by. Bread and butter for Honda, champagne at the Toyota table.
I’ve spent a lot of my career in market research, looking at client data. In terms of sales performance/sales outlook these are the worst I have seen. The only person left interested in Chrysler is George A Romero.
In light of the fact that gas around these parts rose 10c per litre (almost 40c/gallon in American)overnight in the past week is going to send truck/SUV/CUV owners shrieking for the nearest Prius or Mini or what have you. I drive very little, and find filling up nauseating at today’s prices.
Honda is craftier than people think. They twigged to the small, economical but luxurious concept long ago with the Acura-ized Civic now referred to as the CSX here in Canada.
NickR:
Honda is craftier than people think. They twigged to the small, economical but luxurious concept long ago with the Acura-ized Civic now referred to as the CSX here in Canada.
While you may call it “crafty”, most in the industry would call selling a rebadged Civic as an Acura short-sighted, to say the least.
While you may call it “crafty”, most in the industry would call selling a rebadged Civic as an Acura short-sighted, to say the least.
It seems to have worked out well enough over the past decade that every new iteration of the Civic begets a new small Acura. You have to remember, gas prices in Canada drove us to smaller cars before the US got squeezed in that direction.
It seems to have worked out well enough over the past decade that every new iteration of the Civic begets a new small Acura.
Ouch. That model is a pretty blatant example of badge engineering, and a recipe for long-run brand destruction.
Honda has done a poor job of managing the Acura brand. Some of the products are certainly quite good, but the management of the brand has been deficient. It’s a lost opportunity, but as a company, they seem utterly unable to deal with it effectively.
I’m still not sure about how it is different to turn a Civic into an Acura for a modest premium if compared to turning a C180 ($22k?) into an AMG C63 ($65k), or a stripper 316 ($20k?) into an M3 ($65k). Same car, different mission. Porsche sells the same 911 from about $60k to $200k depending on options and motor… Or how about the Toureg/Cayenne! again same car, different mission.
I’m still not sure about how it is different to turn a Civic into an Acura for a modest premium if compared to turning a C180 ($22k?) into an AMG C63 ($65k), or a stripper 316 ($20k?) into an M3 ($65k).
I’m sorry, but those are not analogous to this situation.
An example that is much closer in character is the Cobalt and G5. The differences between the two are modest, and the resemblance unmistakable. If anything, the G5 is actually more differentiated from its relation than is this Acura.
A serious mistake. They only do it because they don’t take the Canadian Acura market that seriously. They don’t sell enough cars to spend the money to make them different.
Pretty much what Ford has been doing with Mercury, and what GM has been doing with just about everything, for decades. Those are not great role models to emulate.
Johnson – You’re contradicting yourself wildly. You accuse Honda of heading for “quasi-niche” then go on to criticize them for not having off-road ready vehicles or a lux-hybrid? Which are…drum roll…niche markets. Hmm… Who cares about respect in different market segments? To be taken seriously in the truck or lux markets? Seems like Honda has done perfectly fine without a truck…and as for Lux, the TL and TSX and even the old RSX sold pretty well. The MDX is a perennial winner in lux SUVs. Doesn’t seem like they’re having too much trouble there, even without the perfect flagship Luxo-barge that everyone claims they need. (RWD, V8, Shitty gas mileage, but it demands respect, dammit!)
I’ve never heard Honda or Acura themselves clamoring for a V8. Never saw an engineer from Honda say “you know, the TL is selling strong, and is a fantastic vehicle, but it would be so much better if it was a V8”. It’s always the gear rags, the message board posters, and gearheads that still stick to the “don’t buy foreign’ mantra. I’ve never heard a single Accord owner personally say “man, if this had a V8…”. People aren’t buying them to be Muscle Cars, and if they are searching specifically for a V8, then they can waddle on down to the Chrysler dealer and score a deal on a 300 that will be dead long before the Accord is. Same goes for Acura. The TL was a success, V8 be damned, and the TSX is a success, V6 be damned. If anything, they should be criticized for not offering a 4-turbo mill as an option on the TSX and Civic. This is not mentioning the RL, which truthfully, after driving one for a day, I’m not sure needs a V8 either. I mean where are all of you people driving that you need all this V8 power? Certainly people aren’t taking their RL to the track, nor are they taking a Benz C320 to the track. The cars are supposedly underpowered only because the gear rags like to pump the 0-60 and quarter-mile times. I drive quite spirited, and 0-60 in 6 seconds is all I’ve ever needed…GM just proved the clamor and need for a V8 is over and overrated with the G8. Why would Honda want to compete in a losing game just to say they have a V8?
ph – that link didn’t work, but it doesn’t answer the question I asked. Honda has been a solid investment, and just because their margins are not quite as high as Toyota, doesn’t mean they’re mediocre, not even considering that Toyota is larger and has more infrastructure. We were talking about quality of automobile, reliability, and sales all together – and Honda hasn’t been mediocre in any of those since the mid-80’s.
The bottom line is that Honda, and even Toyota didn’t need to earn respect in the truck market to be taken seriously – the consumers have already spoken on that one. I hardly think anyone buying a Civic or a Fit or any Honda or Toyota sedan gives a soft shit whether or not there is a lineup of Trucks on the other end of the lot. BMW, VW, Audi, and a bunch of other manufacturers seem to do just fine without a pickup in the lineup…
Honda has been a solid investment, and just because their margins are not quite as high as Toyota, doesn’t mean they’re mediocre
Honda is a good company, but compared to Toyota, yes, Honda is a mediocre performer.
Had you bought Honda and Toyota stock five years ago today, and then sold them both today, your Toyota investment would have returned a 25% higher return than your Honda investment.
Meanwhile, Toyota can take a dollar of revenue and squeeze 10-20% more out of it than Honda.
Those are simply facts. No way around it, and one quarter of results during one of the largest economic downturns that you may experience during your lifetime does not change this one whit. I stand by my argument, and the numbers prove it out.
You’re ignoring something here – I’m not arguing profit margins. I’m arguing the usage of the word mediocre to describe the company and their efforts. Obviously they’re not #1, but that doesn’t mean that everything below #1 is mediocre. Jeep is Mediocre. Ford is Mediocre. Honda is neither.
Panasonic may not be the best maker of TVs, and Sony may be (well, debatable, but for the sake of argument, let’s assume so), and Sony may sell more and make more profit, but that doesn’t make the Panny’s mediocre. I just think you’re misusing the word…
I just think you’re misusing the word…
Sorry, but you are missing the point.
You have certain folks on this thread who think Honda’s lack of product in certain segments is a strength to the company. I am pointing out that it’s a weakness for the business over the long run, and that is never good for a mainstream auto company to have gaping holes in its lineup.
If you like driving your Civic, that’s fine. But that isn’t going to help Honda make money from the customer who ends up buying a BMW or Lexus because Acura didn’t provide him with a suitable product.
Honda makes less money because of their failures in this area. Just because it works at this very moment doesn’t mean that this is a good business strategy. They are strong at the bottom and at the middle of the car market, but have missed the top and the trucks. Don’t confuse Peak Oil with Peak Business Practices.
While Pch101’s numbers of gross vs. net are truly interesting, I wonder to what extent the next few years will show similar relationships of Honda vs. Toyota. I don’t know how much of the expense/return for each company has been weighted to their US businesses. Isn’t the US the most saturated car market in the world? I think so, and given what seems to be our decline vs. other MUCH larger populations, how might things change in the coming years? I don’t see much of a market in India, China and Russia for Sequoias, Tundras, Pilots, etc. Certainly Honda charts their own course. The WSJ had an article a few days ago about Honda’s decision in India to forgo very small cars like the Nano since they sell huge numbers of bikes and scooters for entry level customers. Honda figures the margins for very small cars will be poor, and that customers will much prefer a somewhat larger car.
Toyota has done much better with the Prius than Honda with their attempt. Buy why? I haven’t paid much attention, but I’ve read that a significant factor was appearance. The Prius made a status statement by being so recognizable. If Honda is successful with bringing down the hybrid price differential to $2k or so I wonder how things might change with the next generation of hybrids. Of course Toyota won’t be sitting still.
Toyota is a much larger company which should give them not only economies of scale in manufacturing, but in R&D as well. It’ll boil down to management eventually.
“Had you bought Honda and Toyota stock five years ago today, and then sold them both today, your Toyota investment would have returned a 25% higher return than your Honda investment.”
But Honda has outperformed significantly over the past 6 months.
Can’t get edit to work:
Honda has outperformed Toyota in stock price over the past 6 months. Of course the question is whether this will continue. Both seem to be concentrating on hybrids.
>>”why would anyone buy a Cobalt over a Civic ”
For one, a Cobalt can be had for $5000 cheaper, not counting gas. A Cobalt has a better warranty. A new cobalt can be had for less than a used out-of-warranty Cobalt. That there is a powerful argument.
Also, please note there is someone calling themselves ronin317- please don’t be confused, although I must say my own insightful remarks plainly distinguish me from the parvenu. Otherwise, I take the choice of monikers as a compliment.
Ha ha. That is to say, a used out of warranty CIVIC.
Uh, sorry pal, I’ve been around this site for about 3 years, and I’m far from being a parvenu. I’ve also been using the handle on IM and various forums and Xbox live for about 8 or so years…so don’t flatter yourself. It’s not like I was masquerading as someone else here, and neither were you.
And as for the Cobalt vs. Civic, I’m sure that it’s an even bet that the out of warranty used Civic will need less work over the years of warranty that a new cobalt has.
PC – how can Honda be a failure in a market segment that they have never tried to enter (trucks, and please don’t call the ridgeline a truck, because it’s not)?
Also, I’m not so sure that Honda as Acura is trying to compete for the absolute top of the lux market, nor have they ever. As for your example of BMW and Lexus having more suitable cars, it all depends what you’re looking for. I went shopping for a 330i and came home with a TSX, for a bevy of reasons, and brand image or breadth of product line were not even in the equation. I never cared whether or not their lineup or Honda’s doesn’t have any trucks or an ultra premium luxo-barge. Honda can’t be smart for sticking to what it does well and striving for consistency?
317, I know what you mean- I’ve been on the internet in what we used to call ‘usenet’ and ‘newsgroups’ for- let’s see, 25 years now, discussing these and lots of other topics.
Don’t really want to speculate about whether this or that unit might need more work or not work, since much of that is luck of the draw, and speculation is meaningless. Just responding to why someone might buy a Cobalt over a Civic. A $5000 difference probably means a before-tax earning of $7500 (or more). If you finance the difference you need to add (before tax cost) of interest. Over a typical loan that could easily amount to $10,000 from a person’s earing, and can be a significant portion of a person’s income, especially when they have kids, college, and life to pay for.
I bought a new civic a few months ago, and I still think they’re overpriced.
The funny thing about this thread is that it proves my main point, which is that the future arguments are all going to be Toyota vs. Honda, not GM vs. Ford like they were in the 1950s and 60s.
Prius has taken the thunder recently, but the Honda Insight was actually the first hybrid car sold in the US when introduced in 1999 as a 2000 model. Toyota followed up with the Prius for the US in the Spring of 2000.
Finally, having driven them all, I greatly prefer the way a Civic drives to the numb feeling Corolla, and ditto for the Accord vs. Camry.
RF, once again, the numbers rule! This was very informative.
I suspect Honda did so well because it has a very small proportion of trucks in its lineup, maybe the smallest of the larger brands.
I’m also very glad to see people skipping the dreadful marketing gimmick CUVs for cars. Although given the forces expunging the XUVs from the market, exploding demand, much as I’m glad to see them go, schadenfreude is at a minimum.
You’re not reading what I actually posted Ronin317, and are putting words into my mouth.
I pointed out off-road vehicles and roomy hybrids as just some examples of where Honda offers nothing at the moment. There are many more market segments where Honda does not compete in.
How about offering a full-size truck? Don’t even try to tell me that’s a niche market too.
Who cares about different market segments? Well it certainly seems Honda doesn’t care.
As a company that provides a product (vehicles) to consumers it’s only logical and common sense that a company would want to expand and provide more of what consumers want, and what current customers ask for.
I never mentioned Honda themselves wanted a V8, I merely said their owners have asked for a V8 for years. *I* am a former Honda owner and have patiently waited for over a decade for Honda to offer a V8. Still nothing. Just because you’ve never heard of a Honda fan wanting a V8 doesn’t mean much. The TL may have been a success in terms of sales numbers, but what about other metrics? According to Honda themselves, the TL was most often cross-shopped with Honda’s own Accord. That’s not exactly what I would call successful.
As for the MDX being a “perennial winner”, what does that even mean? That it consistently wins comparison tests? If thats what you mean, it’s wrong. If you mean it’s a best seller, that’s also incorrect as that honor goes to the Lexus RX.
By the way, who ever said a V8 means shitty gas mileage? The 4.6L V8 Lexus has gets very good mileage for a V8, in fact equal to a lot of V6 engines out there.
Further, VW and Audi are the SAME company, get a grip. VW is doing horribly in the US, so I’m not sure what you’re talking about. Audi is a luxury brand, and so is BMW so for them to offer a pickup would be silly and irrelevant.
Acura’s sales this year have been down by a large margin, and it’s unknown whether the new TSX and TL will help improve sales. Hyundai is putting a lot of effort into it’s RWD Genesis sedan and Genesis coupe offerings. Hyundai in the next few years could really hurt Acura sales if Honda doesn’t improve Acura’s offerings and position in the marketplace.
The idea that “everything is fine” with Acura is the same sort of attitude that has gotten the American automakers into the serious situation they currently are dealing with.
edgett, big difference. The C63 AMG has a completely different engine, transmission, as well as unique suspension parts and steering rack. Same thing with the M3 compared to a base 3. The M3 has many unique parts and pieces not found on a regular 3. The C63 or M3 are almost entirely different cars mechanically than their base model cousins. The Acura CSX is EXACTLY the same as a Civic mechanically, the ONLY differences are some slight exterior differences and some different options.
The Prius had the “magic” silent start – Honda’s hybrid didn’t, and that’s why the Prius outsold that and other hybrids. People who put down the extra money wanted that “press START roll away silently” effect.
I find the attempts at bashing Honda somewhat humorous, but also as probably belonging to another thread. When I first mentioned Honda and Charlie Baker it was simply to illustrate the benefit of focusing on a narrowly defined conception of automotion, instead of the “all over the place” operations of the car “majors.”
Amusingly, several posters see this focus as a weakness. Maybe they should consider what a car maker that is profitable can do when the market expands again, and what it can do while it is contracting and that carmaker is adding to its bottom line – compared to carmakers selling dinosaurs nobody wants?
If you read between these posts, you will see that people are buying cars that weigh between 2500 and 3500 pounds. This gives you a ride that will be anything from a subcompact to a midsized job. Consumers don’t know why, but physics tells us that if you can keep the cars under two tons, the ability to put a smaller engine in and still have some performance is possible. If this is the main reason people are buying sedans now rather than suv’s and trucks why are all the domestics so ill prepared to meet that market? Further, I guess we are finding out at $4.00+ per gallon how many of us Americans really need the 5000 pound tanks that we were buying for the last decade.
Johnson,
So the MDX hasn’t won a C&D comparison recently? hmm…the mag I got must have been a misprint…
And full size trucks are a full blown, dominating market segment? And why should Honda care? They are doing great business in the mass market segments, the Civic is slaying everything in it’s class, including the perennial pretender that is the corolla, which has all the driving dynamics of a wet carrot.
So you wished the Accord had a V8, yet you attribute that to being widespread? Exactly what purpose would a V8 serve in the Accord? It makes no sense…So there’s a few V8’s that approach the economy of some less-efficient V6s, and whooptie-do. That still doesn’t mean it’s a good idea to drop it into a mid-size sedan that is not a sport performance platform. I mean, how many of the SRT-8s do you see out of the number of Chargers on the road? I’m not bothering to look up base numbers on that, or any of this because I honestly don’t care that much, but I’m sure it’s a fraction of the total number of Chargers. Why does Toyota never catch crap for a lack of V8 in the Camry lineup, but when it comes to Honda, the Accord gets blasted. Just because Toyota offers a V8 on the other side of the lot in the Sequoia? That’s bullshit of the highest order.
Honda is obviously not going to put out something that might gain them a fraction of a percent of market share just because pistonheads think their lineup should have a V8 Sedan. They’re aiming right down the meat of the market with their engine and car offerings, and doing quite well.
Uh, I know full well that VW and Audi are the same company, I was just listing product lines that are without a full-size pickup or hybrid that are fairly successful and have respect in the auto world that Honda, according to some people here, can’t get until they have a full lineup across every auto category, niche, and market. Luxury or not, the brands are successful despite not having entries in all categories.
Everything is not fine with Acura, but people act like it’s teetering on the edge of the brand abyss along with, say, Mercury, Chrysler, Lincoln, Buick and Saturn. It’s clearly not. And it clearly wasn’t meant to be a conquistador in the lux segment, overtaking MB, Lexus, BMW, and others. As Acura stands, it’s an affordable, upmarket alternative to Honda’s mass offerings. There are models that have just enough to distinguish it from the similar models on the Honda lot. And note that half of the models in the Acura portfolio are exclusive to Acura, and don’t have a US based Honda counterpart. It’s not just a trim level upgrade, as ford does with the Fusion/Milan/MKZ (which actually isn’t a bad vehicle…)
There is no question in my mind that Lexus is a more successful luxury brand than is Acura and that Infinity likewise is a struggling luxury brand.
Honda is clearly focused on the vast middle market and only plays on the fringes of the high end. There is nothing wrong with that, as it simply says that Honda knows who they are and who they are trying to serve / sell to. I own stock in both Toyota and Honda, but the last two times we bought cars both were from Honda. After driving most of the available sedans, the Accord in particular impressed me as a much better driving car than the Camry. Also, on well equipped models, Honda gives you more bang for your buck … which might be why Toyota has reported slightly higher profit margins. Then again, Toyota is much bigger than Honda and by all rights that should in itself mean higher profit margins as fixed costs get spread over a much larger base at Toyota than at Honda.
Ronin317, once again you’re not listening to what I said.
NOWHERE did I say Accord owners want a V8. I DID however say that Honda/Acura owners want a V8. “Honda owners” is a broad statement that I used. No, Accord owners do not want a V8, but some Ridgeline owners have asked for the V8. What for you may ask? To do truck stuff, like hauling loads and towing. Acura owners have also asked for a V8? Why? Because it’s the luxury market.
So the MDX has won a C&D comparison recently … your point is? How exactly does that make the MDX a “perennial winner” you still have not explained.
You question why people even need V8s. Using your logic, why do people need V6 engines? I guess according to you 4 cyl engines are good enough right?
In the luxury market image and prestige matter a lot. You’re probably wondering why does Honda care right? Well if they don’t care they shouldn’t be marketing Acura as a luxury brand then. If Honda wants Acura to be a luxury brand, then they must provide what the market wants in order for Acura to be considered a luxury brand. One of those things is a V8 engine, another is having RWD cars.
A V8 engine adds prestige to a luxury brand. Most people want the V8 engine, even though most people will buy the cheaper V6 version. Perfect example is how so many people want or dream of an M3, yet most end up buying a regular 3 Series.
Let me also state that your opinion is just that; your opinion and nothing more. Your opinion does not represent the opinion of all Honda fans or all Honda owners out there.
What I’m stating is not just my opinion; it is the opinion of many in the industry, as well as the opinion of a large number of Honda/Acura fans aas well as owners.
John Horner, after buying Hondas for years, my next purchase will most definitely be a Toyota. Really though, personal anecdotes like this matter little in this discussion.
As for the Civic “slaying everything it’s in class”, a ridiculous statement if I’ve ever heard one. I assume Ronin317 you are referring to sales numbers, in which case you’re incorrect.
Civic has only been on top sales-wise in the US for ONE month (last month). The Ford F-Series is still the year-to-date leader.
Also, if you actually bother to realize that the world is compromised of more countries than the US and Canada, you will find that on an annual basis, the Corolla is the best selling vehicle in the world. The Civic in terms of worldwide sales does not even come close.
Johnson : “Really though, personal anecdotes like this matter little in this discussion.”
What kind of a lame slam was that supposed to be? I said that I test drove both the Camry and the Accord and liked the Accord better for several reasons. That is certainly relevant and fair game in a discussion such as this. Your pontification about how you and other smart people KNOW that Honda needs V8 engines is hardly Pulitzer Prize worthy stuff. Did you notice how GM just pulled the plug on their expensive Ultra V8 development project in light of changing market realities?
Whatever, you are entitled to your views, but you are not entitled to declare what is and is not relevant “in this discussion”.
Why do we thing that the two most successful Japanese mfgs. toyota and honda are in a race where one will lose out to the other. First toyota like the old GM caters to the mass market. It’s stuff is solid, and somewhat bland. Honda is more of a drivers car. In the US, unlike Europe, you do better with vanilla cars that do no harm. For Honda to differentiate in styling and driving dynamics is the same as mercedes and bmw with bimmer being the drivers image. Both honda and toyota will continue to do well. The final point is that resale of both the Japanese titans is higher than the other foreign brands and the US brands. This is the final nail in the Detroit coffin. Even if the malibu is slightly better than the Japaenese brands, look at the historical resale value. The cost of ownership turns against all American brands (except maybe corvette) when you factor in resale value. This is the result of toyota and honda going into their 6th & 7th generation of the same brands ie camry, accord, civic, corola etc. The domestics like to play musical chairs with their brands. What’s a ford 500, or a lincoln aviator, etc? Who will ever go to a dealer and ask for one by name? Do you remember when, bel air, fury, galaxie lasted for years and years with redesigns? Now the chickens have come home to roost….
The Prius had the “magic” silent start – Honda’s hybrid didn’t, and that’s why the Prius outsold that and other hybrids. People who put down the extra money wanted that “press START roll away silently” effect.
That had nothing to do with it. For us, it was the greater interior space, and especially being able to fold down the back seat.
“For us, it was the greater interior space, and especially being able to fold down the back seat.”
Long live hatchbacks and wagons. They simply make better use of the footprint than does the silly sharp of a “traditional” sedan. A Civic Hybrid Wagon would be killer.
For all the talk about how ‘mericans don’t buy hatchbacks or wagons, look at how well the Fit, Versa, Scion xB, Prius and Mini Cooper are doing. Some of the hottest tickets on the market right now are hatchbacks.
For all the talk about how ‘mericans don’t buy hatchbacks or wagons, look at how well the Fit, Versa, Scion xB, Prius and Mini Cooper are doing. Some of the hottest tickets on the market right now are hatchbacks.
These are all either niche sellers or econoboxes. The top sellers are still sedans and trucks, but for the Prius that is an anomaly unto itself.
Americans generally like to have a trunk. With a few exceptions, hatchbacks are associated with being low rent cars. You aren’t going to find too many successful $25-30,000 hatchbacks.
In some cases, a squared-off back is OK, but hatches and wagons are not terribly desirable to most buyers.
Hi everyone.
Well regarding earlier comments about Nissan and not understanding their moves (especially in UK, Katie) you gotta remember. Who calls the shots at the so called Alliance? Of course, Renault, Nissan is nothing more than a car company with no decision making power. And right here, right now, I predict Renault will break-up Nissan as soon as it get a foothold in the American market. Even though consumres don’t even know yet, they’re already trying in NA. In Mexico, almost all new Nissans are Renault. And, except for the truck side, it’s the same thing in the US and Canada. So fans of Nissan,say farewell to your much loved machines, prepare to love with as much vigor your French rides (can’t avoid a laugh)!!
Call me crazy???
Yeah, your sso-so Nissan Versa is better known in Europe and elsewhere as the all new Renault Clio (3rd or 4th generation, lost track)!!!!!!!!!!
All do pls enjoy
Johnson “Let me also state that your opinion is just that; your opinion and nothing more.”
“What I’m stating is not just my opinion; it is the opinion of many in the industry”
“John Horner, after buying Hondas for years, my next purchase will most definitely be a Toyota. Really though,
personal anecdotes like this matter little in this discussion”
So if I understand your argument it is the opinion that Honda needs a V8 is a more valid than those opposed to it simply because it is the opinion of many in the industry. Well in that case who the hell is running Honda? Are they unpaid volunteers, the people running Honda seem to have a differing opinion than yours. Aren’t they in the industry professionals too? So it seems that the opinion of many here opposed to Honda going into V8s is every bit as valid as yours as it is also supported by many in the Industry and more specifically by those actually running Honda.
Let me make this perfectly clear: when I say “the opinion of many in the industry” I am specifically referring to a large group of Honda and Acura owners for the most part. In other words, I’m talking about the market.
Any good company caters to its consumers. A good company should provide what customers want, and if customers change what they want, a good company should keep up with the changes. In my humble opinion I think this is a reasonable idea that most would agree with.
Honda has refused to make a V8 for almost 20 years now. Back in the late 80s, McLaren actually asked Honda to develop a V8 for them. That V8, if it had been made, would have gone into the McLaren F1 supercar. Honda repeatedly refused McLaren. In the end, a BMW engine ended up in the famous F1 supercar. This wasn’t Honda making a V8 for their own lineup, but for another company’s supercar. Honda still refused. At that time, Honda had already made racing V8 engines, yet they refused to make a high performance V8 for McLaren. That is but one example of Honda’s arrogant attitude.
If Honda feels they don’t need to make a V8, no opinions in the world will stop that decision.
My ultimate point is this, whether you agree or disagree with me:
Honda is free to make whatever decisions they choose, BUT any decisions Honda makes against the market and the demands of the market Honda does so at it’s own peril.
ANY company that chooses to go against the market does so at its own peril.
Toyota over the decades has tried quite hard to cater to market demands, and has sometimes created new segments in the market sparking new demand. The market has rewarded Toyota with tremendous success.
The market has rewarded Honda with success as well, but not to the same extent as Toyota.
Sigh…
So now Honda is going against the market? Not GM or Chrysler going against the market, but Honda?
Johnson has so thoroughly wrote himself in a circle that I can’t follow this anymore…I mean, hell, it was about the US market, so a point is brought up about it, and you change it to the world market. What do you want here?
Ronin, my comparison of AMC and Honda was only relevant in the sense that AMC were consistently strong (but not exclusively oriented) towards smaller cars (sporty handling was not something any American cars had back then, in any way shape or form so it’s a comparison only based upon relative size compared to the rest of the market).
Likewise, AMC sales started upward on a nice trajectory in 1956, peaking in numbers in 1960, and in market placement in 1961, after which the market changed and AMC tried to change to suit, but missed the target (as Geeber mentions so eloquently with good details of what transpired).
Geeber, had AMC gone ahead with the Tarpon in 1964 instead of the Marlin in 1965, the “Barracuda competitor” Tarpon fastback (based on the smaller Rambler American). The problem that the engineers had with that plan was that the then-current AMC V8 (287 & 327) weighed in at 650 pounds and was considered unsuitable for the American. (The 1967 290 & 343 V8’s were okay for smaller cars, weighing substantially less).
Instead, the engineers should have thought outside the box, shifted the engine back in the car a few inches and used the same Bendix front disc brakes that Studebaker used in the Avanti, on V8 Tarpons.
Can you imagine the look on the faces of the prospective Mustang buyers in 1964, when faced with a Rambler Tarpon with 270 horsepower and a twin-stick five speed manual?! Heh heh. Mustang didn’t get 271 horsepower as an option until 1965.
Sorry, got sidetracked. Anyway, the comparison of Honda and AMC is majorly flawed in many ways, but the point is, that markets change and can be capitalized on by companies – but said companies must also be flexible and not trap themselves into marketing corners as Rambler did (“sensible shoes – we gotcher sensible shoes here.”)
And that post is supposed to make it less ridiculous? Look I agree that a company which is inflexible will trap themselves and eventually lead to their downfall, but Honda isn’t even close to that. At all. Your example was well thought out, just had the wrong application here…and I can’t think of a modern brand that it would fit for.