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Report: Honda Civic Line Does Not Earn A Profit; May Incur Loss

9K views 42 replies 28 participants last post by  RichardOrland 
#1 ·
Motor Trend
August 2016; Page 19

Have you been seeing a lot of new Honda Civics around? If so, there's a good reason why. They're loaded with class-exclusive features, and they cost less than the competition at the same trim levels.

What they don't do, according to well-placed sources, is make money. In fact, Honda may even be losing money on every new Civic it sells.

No doubt the strategy is to capture market share by undercutting the competition, but you have to wonder how long a company, even one as big as Honda, can afford to lose money on a high-volume car.

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#2 ·
A very strange public statement by Motor Trend.

If true, we will assume that Honda knows what it is doing in this terrible market for compact and subcompact automobiles, and hope it makes up the margins on the CUVs it sells, currently in great demand. Remember that all those Civics - profitable or not - make the Pilot, Acura, Odyessy and Ridgeline (etc.) type vehicles possible in terms of CAFE regulations.

There is more here than simply earning a profit on a subcompact. Motor Trend should know better.


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#13 ·
Except Civic isn't a subcommpact.
 
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#4 ·
I heard rumors that VW has been doing this with the Golf for a long time. Wouldn't surprise me one bit if Honda copies something else from the Germans. :)
 
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#7 ·
I heard rumors that VW has been doing this with the Golf for a long time.
If neither Honda Civic nor VW Golf are profitable in the U.S. market, it's very likely that Ford Focus, Chevy Cruze, and Dodge Dart incur losses on the income statements for their respective parent companies.
 
#6 ·
What do you think they have been doing the past 30 years?

It isn't about Gaining Market Share, it is about Gaining Customers for Life. GM never could figure this out.

GM always cried that they could not make a profit on Compact Cars. Trying to sell a Sunbird against a Civic was almost comical. It was like trying to sell a Fierro against an RSX stating that they were both 2 seater rear engine cars.

So GM went and bought Daewoo, a Company that went Bankrupt, to build small cars for them that made a profit. Wise choice GM.

Honda on the other hand sold Many Millions of Accords and so on, because the Customers that purchased a Civic as their first new vehicle had a great love of them.
 
#9 ·
Honda may sell these at a slight loss, but it will be consistent across the board for anyone buying one. GM, on the other hand, will happily sell some Cruze for 28K if someone uneducated buys one, but will move some at a bigger loss once the 20% off sale (or something similar) comes around. Which then will aggravate those that overpaid, which hurts the brand equity and resale vale of the Cruze longterm.

You may not like Honda or their vehicles, but they tend to keep things simple for the buyer that doesn't want to do the research to sniff out a great deal...which keeps their reputation and resale values on the higher end of the spectrum.
 
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#16 ·
But let consider the Decades that GM fumbled the ball. I started driving in the 80's. I was family influenced to the GM brand. I thought that they had the best car going. Honda was a relative New Comer to NA. My father had a Chevette as a loner for a couple of weeks while his Monte Carlo was being repaired. Compact but RWD yata yata.

Then I drove a Buddies Civic SI FWD? It drove nicer than my Dad's Monte, and was quieter, and less NVH than the V8. A totally different world than the Chevette. I lost some love for GM right then. Although I have never owned an Import, well other than some Ice Racers, but I wouldn't rule them out after that.

After that all of my outboards, have been Asian, with a very similar OMC Family back ground.
 
#14 ·
So is Feel Th' Boin-ie running Civic Division now? :dro:
 
#22 ·
This would neatly explain the miserable last generation Civic. They cut their costs to fit the market and . . . suffered massive damage to reputation for doing so. They're kinda stuck here: make money, lose reputation OR lose money and maintain reputation.

It's a tough trade-off, one that GM flubbed with Cadillac over the last 30+ years. And now look at what they're having to go through to revive a great name. Very tough call.
 
#34 ·
I think they do math very well. They know that for each Civic they sell at a small loss, they can sell an Odyssey or Pilot for a good profit. They also know that if they sell the customer a really good Civic now, that they have a good chance that they will stay with Honda for many years and but several of their more profitable vehicles. I think Honda has the most loyal customers followed by Toyota.
 
#31 ·
Oh please... if the Civic is losing money for Honda they are more than making it up in other areas. The new Civic is a class leading car and now people are complaining about it not making money. However, when Honda redesigned the Civic back in 2011 and cut corners to save costs the press destroyed the car and the reviews were middling at best.

People are never satisfied.
 
#32 ·
Civic 35,396 +11.2%
Corolla 34,872 +2.7%
Elantra 22,168
Sentra 20,204 -2%
Focus 17,455 -27.1%
Cruze 16,671 -29.8%
3 10,127 -1.8%
Forte 9,910
Impreza 5,928 +5.1%
Dart 4,514 -48%

The 10th gen Civic is built on the same platform that will underpin the next Accord and CRV, all three near or at the top of their respective segments with the least rebates on them, and actually end up in driveways not the airport. Loosing money on the Civic? Hahahhahahhahahaha
 
#33 ·
Civic 35,396 +11.2%
Corolla 34,872 +2.7%
Elantra 22,168
Sentra 20,204 -2%
Focus 17,455 -27.1%
Cruze 16,671 -29.8%
3 10,127 -1.8%
Forte 9,910
Impreza 5,928 +5.1%
Dart 4,514 -48%

The 10th gen Civic is built on the same platform that will underpin the next Accord and CRV, all three near or at the top of their respective segments with the least rebates on them, and actually end up in driveways not the airport. Loosing money on the Civic? Hahahhahahhahahaha
Took the words right out of my mouth.
 
#38 ·
#39 ·
Read in different areas, its millennials, 18-35 year olds. And to show how loyalty works, Honda quoted some survey that states the Accord is the midsize car that's most popular with..................millennials.

And if might add, Honda fans are a lot like GMI fans, they have not been happy for alooooong time. The previous Accord, Pilot and Civic generations were embarrassing, and they will say so (known as the lost generation). Honda heard the criticisms, did some house cleaning, started to find its "soul" again and are now seeing products the engineering guys, not the finance guys wanted to build all along. New gen Accord due out next year.
 
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