Americans' weaker appetite for mid-sized cars is eroding sales of two icons, the Honda Civic and Accord.
Honda Division spokesman Andy Boyd says high incentives offered by the competition also are hurting sales.
To maintain its brand image, Honda has resisted incentives, particularly customer rebates, despite fierce price wars.
On March 2, Honda began offering dealer cash of up to $600 on Civics and Accords. The more Civics and Accords that dealers sell, the higher the cash award.
Dick Colliver, executive vice president of automotive sales for American Honda Motor Co. Inc., says the automaker prefers to cut production rather than offer expensive incentives.
"Last fall, when the New York market went flat, we adjusted inventories," Colliver says. "The dealers wanted incentives, but we don't want to get into overstocking."
Asked if Honda Division would offer consumer incentives, Colliver said: "Never."
On March 1, Honda had a 73-day supply of both the Civic and Accord. Sixty days is considered typical for the industry.
U.S. sales of the Civic and Accord have eroded in the last 4 years.
|Source: Automotive News Data Center|
Civic's U.S. sales dropped 26.9 percent in the first two months of this year to 33,481 compared with the year-ago period. Accord sales dropped 15.0 percent to 44,296.
As for the competition, Nissan Division, for instance, is offering $2,500 customer cash on the Sentra and $1,500 on the Altima, excluding the high-performance SE-R.
Honda is offering 2.9 percent cut-rate loans on all Civic and Accord models, including hybrids. Before March 2, hybrid versions of both cars were not eligible for the loans. Hybrids use an internal combustion engine and an electric motor to power the wheels.
The growing truck segment is the primary reason Civic and Accord sales are slipping, Colliver says.
He believes that Honda's first pickup, the Ridgeline, will help boost sales this year. The truck went on sale in February.
Colliver has said that Honda Division needs to broaden its truck lineup. Honda offers five light trucks, compared with three in early 2002.
He expects Honda sales to rise about 2.0 percent this year, "mostly on the truck side."
Through February, Honda's U.S. sales were down 10.6 percent to 149,819. In 2004, Honda Division sales rose 1.4 percent, to 1,195,479 million. The U.S. market also rose 1.4 percent last year.
You may e-mail Kathy Jackson at [email protected]
You may e-mail Charles Child at [email protected]