Honda uses incentives to jolt sales

[PontiacJ8]

DETROIT — After a month shopping for a new sedan, Atlanta resident Chuan Sha narrowed his choices down to a Honda Accord and a Volkswagen Passat.

“It was a very close call,” said Sha, a software engineer. His Honda dealer tempted him with free tire rotations and oil changes for the life of the car.

But on June 28, Sha went for a $26,000 VW Passat GLS loaded with $2,000 in incentives, cut-rate financing and appealing features such as heated side mirrors.

“It’s also more eye-catching than the Accord,” he said.

For years, Honda Motor Co.’s highly reputed, fuel-efficient vehicles sold themselves. But the Japanese automaker is now breaking a sweat to move the metal, as it struggles to defend its 8.2 percent share of the U.S. market.

In addition to rival Toyota Motor Co.p., Honda is facing more heated competition from aggressive European brands, such as VW, and Asian newcomers in its core compact, sedan and minivan markets.

Two of Honda’s biggest sellers, the midsize Accord and Civic compact, are still very popular but not as fresh as newer rivals.

In April, faced with sliding sales in the crucial U.S. market and the embarrassment of a big recall for transmission repairs, Honda relaxed its tough stance against incentives. It still avoids outright cash rebates to consumers but is slipping money to dealers to help them close sales.

During the first half of 2004, Honda racked up a 3 percent increase in U.S. sales, compared with the market’s overall rise of 2.2 percent.

But that modest gain was achieved at a price: Honda more than doubled incentives, to $1,011 from $479 a year ago, according to Autodata Corp. in New Jersey.

“The market is as competitive as I’ve seen it in the last 10 or 11 years,” said **** Colliver, vice president for sales at Honda’s U.S. operations.

With North America accounting for around 80 percent of Honda’s profit, higher incentives are squeezing margins. In addition, the yen’s rise erodes the value of Honda’s U.S. earnings. The company expects its earnings this year to fall 10 percent from last year’s record $4.4 billion profit.

Full Story HERE

[ThomasM]

Two Reasons:

1. Stale Product. They haven't redesigned their product like in awhile. Their competitors have caught up. It's no longer cool to drive a Civic. Competitors' minivans offer more or less the same features as Odessey.

2. Ugly Accord. Have you see that thing? It looks like a tick about to pop. Not a good thing to do to your bread-and-butter sedan.

They'll get a small bump from the new Odessey, but after that, they'll need to go back to incentives - unless they come up with some cool "gotta-have-it" feature. Honda's beginning to look a little like Saturn.

[delmarjohn]

As I read some of the posts I sometimes wonder,what others are seeing .Honda for years has copied design efforts of others they have never been a leader in that dept for example the back end of the accord coupe is that not a duplicate of the mercedes,but the key here is when a nameplate has been around for a while it in itself becomes less cool,let me explain.Honda has been here now several decades and they are no longer fresh in the market.The american nameplates have had a much longer life span and they have suffered from many cycles.Once you have been around foir a while the next generation of buyers don't want to drive their fathers or mothers car they want something different .Over the years Volvo has past through this cycle ,cadillac ofr sre ,ford is now trying to pass through.Toyota even started a new division and if you look at the new scion only the BOX is radical the other vehicles are mainstream just with a new nameplate.What I am trying to say is that elusive cool factor and also the follower syndrome are elusive and fleeting ,just ask Oldsmobile they not to long ago in auto history had the number one selling car ,now did they make the best car NO it was good one and it wasn't a chevy it was looked at as an upgrade from the lower ranks.honda and toyaota have both shared the number one selling cars of the last several years are they the best NO toyota has used the same chassis for at least the last two if not three camrys {still with the hanging exhaust system**but if you will notice it doesn't have the same buzz I have some friend sthat have bought some of these cars and they do it by habit when asked about features or that of a competitor they are unawares of what they have and what others offer.We would all like to think people put alot of effort into this expenditure but from experience most JUST follow the crowd ,it is that safety in numbers thing andfor others it is the cool thing .

[IMPALAon20s]

bet they still wont get bashed by critics the way gm did for offering incentives. they'll probably just go on about how much of a bargain a new honda would be etc etc.. but when it was gm all you heard was "only able to sell due to incentives..etc.etc"

[SUPERBADD75]

bet they still wont get bashed by critics the way gm did for offering incentives. they'll probably just go on about how much of a bargain a new honda would be etc etc.. but when it was gm all you heard was "only able to sell due to incentives..etc.etc"

the difference here is the amount of incentives. the average incentive on these Hondas is $1,011 dollars... not too much compared to GM incentives. the cars still sell themselves pretty well, but in a market where EVERYONE is offering rebates, or "customer cash", or dealer cash, Honda had to make a gesture. i'm curious how the average GM incentive compares to the $1,000 dollars you get from Honda, but i bet it's at least a grand more.

Two Reasons:

1. Stale Product. They haven't redesigned their product like in awhile. Their competitors have caught up. It's no longer cool to drive a Civic. Competitors' minivans offer more or less the same features as Odessey.

2. Ugly Accord. Have you see that thing? It looks like a tick about to pop. Not a good thing to do to your bread-and-butter sedan.

They'll get a small bump from the new Odessey, but after that, they'll need to go back to incentives - unless they come up with some cool "gotta-have-it" feature. Honda's beginning to look a little like Saturn.

this is stupid. the Civic had a recent freshening, and looks a bit like a mini Accord now. much better than the ho-hum styling it was wearing a couple of years ago.

the Accord is still selling pretty well, and beauty is in the eye of the beholder. i hated it when it first came out, but it has really become very good looking to me lately. besides, the interior and engine are the best reasons to buy the Accord.

saying that Honda will EVER be anything like Saturn is ridiculous!! Honda may lose some sales, but they won't be basement dwellers like Saturn. at least Honda has a reputation for quality and well put together cars. Saturn is renowned for building ugly, boring cars with underpowered engines, and cheesy interior fabric.... Honda is known for good, quality cars. boring or not, it works.

[boblutzfan]

Honda is the favored child of the automotive press and will not get bashed for anything. Think about what has happened over the past year...

1) Civic sales are dropping like a rock - the next generation of kids are turning to the Neon SRT (who would have thought that!), to the nissan sentra to name a couple that handle better than the current civic
2) Accord sales are down - after just two years.
3) Quality issues have begun to creep in.
4) Massive recall on their five speed transmission
5) Odessey sales are down

If any of the us brands had that many problems in one year, they would be crucified in the press.

I firmly believe that if the Malibu had been prettier from day one, that they would have had huge sales due to the value quotient. It is a better car in terms of the price/value/performance and it gets great gas mileage for a V6.

The cobalt has the ability to sell well if the price is ok... and they don't have any quality gliches out of the gate. However, the automotive press will never give GM the credit while Honda/Toyota/Lexus is around.

One more thought... if Acura brought out a luxury/sports sedan with the interior that the CTS has (which is high quality... just different looking) it would have been praised as "forward thinking and unique". Instead the CTS gets criticized left and right for its interior. It couldn't be that bad selling in the numbers that it is.

[impala02]

Originally posted by SUPERBADD75@Aug 2 2004, 02:22 PM

this is stupid. the Civic had a recent freshening, and looks a bit like a mini Accord now. much better than the ho-hum styling it was wearing a couple of years ago.

I think that most of the "tuner" crowd would disagree with this comment. The current generation Civic is no longer the cool car to throw a bunch of stickers on, a coffee can muffler, and an F1 spoiler on the rear. To me, this is a good thing, but I think that the Civic has definitely lost street cred with the tuner crowd.

the Accord is still selling pretty well, and beauty is in the eye of the beholder. i hated it when it first came out, but it has really become very good looking to me lately. besides, the interior and engine are the best reasons to buy the Accord.

Definitely true...I never really liked the previous gen Accord's vanilla styling (with the exception of the coupe which looked completely different), but they were decent cars. However, I still can't stand to look at the current Accord. I still hate it as much as I did the first time I saw it. The sedan looks bad, and the coupe is even worse.

[ibechip]

And GM still offers 4,000 off on a new Cavalier. If they could manage to sell cars with only 1,000 in rebates, the battle will be half won.

[Taycron]

I know Honda's are good cars but I've never seen one that made me stop and say "Wow, that's a nice car".. The styling is always bland and the interiors are boring.. I've driven a few but I never felt the need to own one. If they weren't reliable they'd be in big trouble.

[cincygoblue]

More "eye-catching"???? than the Accord????

Hard to tell which catches my eye more.

or did his girlfriend just think the passat was more "trendy"?

[benjamin]

Honda on the move: Company breaks own record with highest July sales and year-to-date sales


Something tells me that the increased incentives aren't a sign of trouble for Honda.