Honda: With Civic, we lost sight of rivals, customers
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TOKYO -- Honda Motor Co. executives at the Tokyo Motor Show were both apologetic and circumspect about their recent missteps with the widely criticized redesign of the Civic small car.
President Takanobu Ito took personal responsibility for the bad reviews, while the company's global r&d chief conceded they took their eyes off the competition and the customer.
"We now understand that customers expect a lot from Honda. Customers want more innovation," Yoshiharu Yamamoto, president of Honda R&D Co., the automaker's development arm, said in an interview. "That's something we've learned this time."
Yamamoto said Honda engineers lost touch with their customers and let rivals sneak up with more competitive products. He pledged the company would raise the bar for future projects.
"Especially with the Civic in this case, we tried to meet the expectations," Yamamoto said. "But our competitors, including Hyundai and Ford, set clear targets to make their cars better than the Civic. We probably did not pay close enough attention to where our competitors were at."
Ito took public blame for the car's poor reception and sales performance in the United States since its April launch. "The ultimate responsibility rests with me," Ito said.
For the first time in more than a decade, the 2012 Civic was left off the list of "recommended" vehicles by Consumer Reports magazine, largely due to its plastic interior.
Civic sales in the United States have plunged 14 percent to 200,690 vehicles this year through November, while the overall market grew 10 percent.
Sales were undercut by the March 11 earthquake in Japan and recent floods in Thailand, which hammered output for much of the year.
John Mendel, executive vice president of American Honda Motor Co., has said the company may give the Civic an early midcycle restyling.
Yamamoto did not comment on a possible redesign. But he said that the company may deploy its new powertrain technology, unveiled ahead of the Tokyo Motor Show, in midcycle model changes to models that recently underwent full redesigns. The Civic and CR-V fit that bill.
Most customers voice little dissatisfaction with the powertrain in the Civic or other Honda vehicles, said Yasuhisa Arai, a managing officer at Honda R&D.
"Our powertrain doesn't get many complaints," he said. "But does that mean we're meeting expectations? Customers think Honda should do more."
And Honda aims higher. The base model Civic is EPA-rated at 28 mpg city and 39 highway. The Hyundai Elantra, by contrast, achieves 40 mpg on the highway across all trim levels.
Honda's new line of Earth Dreams engines, which begin a gradual rollout next year, feature direct injection and double overhead cams. The company says the four-cylinder versions can deliver a 10 percent improvement in fuel economy over the current generation of engines.
Yamamoto said the new technology will help Honda stand out from the crowd.
"We have to be the one where the customer says, 'We want Honda,'" he said. "We think that this new powertrain will make that difference."
You can reach Hans Greimel at hgreimel@crain.com. -- Follow Hans on 
