Why Honda's Insight is no longer a good Fit

Honda has a 237-day supply of Insights in the U.S.
UPDATED: 2/17/14 9:14 am ET - adds translated mpg

TOKYO -- Honda is pulling the plug on the Insight and CR-Z hybrids in Europe. Could a similar kill-off happen Stateside?

Dropping them would pare the brand of its biggest deadwood. Each sold fewer than 5,000 units in the United States last year.

And that seems to be the primary motivation behind last week's announcement to stop selling the models in Europe, where volume has slumped on waning enthusiasm for electrified drivetrains.

In the United States, sales of the sporty CR-Z hatchback rose 9 percent last year, but only to 4,550 units. Insight volume, meanwhile, dropped 18 percent to 4,802 vehicles.

As of Feb. 1, there was a 187-day supply of CR-Zs in the United States and a whopping 237-day glut of Insights. The latter was more than double the average 99-day supply for Honda's cars.

A Honda spokeswoman said the company plans to keep selling the vehicles Stateside, for now. That makes better sense for the CR-Z, which occupies a sporty niche unburdened by hybrid rivals.

But the Insight seems a prime candidate for the chopping block.

Honda's latest hybrid toolbox has already rendered the Insight's older-generation motor-assist hybrid system obsolete.

The new technologies include a more powerful and more efficient one-motor system deployed in the redesigned Fit Hybrid hatchback and its crossover variant. There is also a two-motor hybrid system for bigger vehicles such as the Accord sedan.

If Honda wants to keep selling a compact hybrid in North America, it is tempting to drop the Insight and swap in the Fit.

For starters, the latest Fit Hybrid is more efficient. It achieves fuel economy of up to 36.4 km/liter (85.6 mpg) under Japan's testing regime, compared with 27.2 km/liter (64.0 mpg) for the Insight.

To be sure, Honda could update a next generation Insight with the new hybrid system, but why bother? The Fit already better fills the role of a compact hybrid. In Japan at least, it costs less and delivers more interior space than the Insight.

Those dynamics aren't lost on Japanese consumers.

Insight sales in Japan plunged to 3,880 units in 2013, from 8,905 the year before, another sign the car is fading fast.

What's more, the Honda is already making the standard gasoline Fit at its new plant in Mexico. It may be cheaper to ship over the hybrid drivetrain units for installation in Mexico-made Fit Hybrids than to keep shipping fully built Insights from Japan.

Honda President Takanobu Ito has said he wants to somehow continue the Insight name. Indeed, in a late 2012 interview, he was more committal about the badge's legacy than its hardware.

"I can't promise it, but we want to continue to at least take care of the product name Insight," he said. "But if the timing is right and the technology comes together and converges into a product, that's when the name Insight is a good name."

Insight has sentimental value because Honda picked the name for the two-seat hybrid it brought to the United States in 1999, beating the arrival of the Toyota Prius by several months.

Since then, the Prius has gone on to become the synonymous with hybrid and the world's best selling gasoline-electric car.

Perhaps it's time to bury the Insight and move on.

You can reach Hans Greimel at hgreimel@crain.com -- Follow Hans on Twitter: @hansgreimel

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