Acclaimed 2018 Accords sit on the lot

MARYSVILLE, Ohio — A 2018 Honda Accord moved methodically down the line at the Marysville Auto Plant here in February as workers in white uniforms carefully assembled and inspected the reigning North American Car of the Year.

The product features a bevy of enhancements, including a quieter ride thanks to spray foam injected into the body cavities. The sedan also provides a more solid driving experience, a byproduct of its first-ever use of a high-performance adhesive.

The new Accord, however, is leading a complicated life.

Dealers love the storied sedan, saying it's a formidable package that tops the rival Toyota Camry. Some even say it's Honda's most impressive car to date.

Even so, Honda dealers are struggling to sell it, as dealers everywhere struggle to sell midsize cars. Some have resorted to turning down shipments from Marysville.

The whirlwind of activity at the plant, therefore, is turning out to be the last action that many Accords see for some time. Once they reach dealer lots, Honda's award-winning sedans are forced to sit.

Inventory levels stood at a 104-day supply on March 1 — high by any standards, let alone Honda's typical sparse count.

Dealers around the country blame a lack of enticing lease offers.

Consumers are looking for deals, but they aren't finding any for the Accord, an improved specimen that carries a higher sticker price — $24,460 with shipping — than the previous generation. This means consumers who leased a 2015 model, for instance, are returning to stores now to find that their monthly payments will be considerably higher if they want another one.

One dealer, who declined to be named, said Honda is abandoning buyers who only lease.

Dealers say this is unacceptable as they contend with the Camry. Toyota has amplified Camry sales with regional 36-month lease specials for its lower-end LE trim.

On its website, Honda lists a standard three-year Accord lease that calls for a $249 monthly payment with $3,199 down on the LX, its base trim, for well-qualified customers. But in Los Angeles, a Camry can be leased for $219 a month with $1,999 down. In Miami, the Camry deal is $199 per month with $3,198 down.

"Where lease is heavy, like Florida, New York, Ohio and California, that's where we're getting hurt," said Rick Case, CEO of Rick Case Automotive Group, which has Honda stores near Miami and in suburban Cleveland. "When you get two cars as close as they are, it's not that much better than the Camry that people are going to pay $50, $60 [or] $80 more a month."

Case said his Davie, Fla., location turned down some Accord deliveries in January and February. The store has more than 600 Accords in stock; it normally carries around 400.

Accord sales, Case says, are performing at about half the usual rate. Case said Honda is trying to rely on the Accord's various accolades to sell it, but they haven't been enough so far.

Case isn't the only store passing up on more Accords. Sources said Miami-area dealers have turned down around 1,000 of them, and some California stores have done the same.

A Midwest dealer, who declined to be named, said he may soon join them.

"I will take what we need for the spring. Then I'm going to take a good long look at it at the end of March and April," he said. "If they start piling up, I certainly will shut them off."

Dave Conant, whose Conant Auto Retail Group has four Honda stores in California, said Accord sales are at about 60 percent of where they typically are.

Conant said he understands that Honda made a big investment in the Accord and isn't looking to throw money at it. But he doubts the automaker will go the rest of the year without offering some kind of incentive support, particularly on the leasing side. Accord sales in the U.S. are down 13 percent this year in a challenged segment down 15 percent.

"I'll be surprised if we don't see some help in April or May. They're not going to let the car sit on the lot," Conant said. "Without the incentive support, the payment from the car [that customers are] trading to the new one — the gap is too large. They need to do something to bring that closer, and the car will start selling and leasing well again."

In Detroit, a market that's already a challenge for imports, a source said dealerships have a 200-day stock of Accords, up from the usual 60 days. In past years, half of the Accords in the area were leased, but that has dropped to about 20 percent for the latest model.

A dealer, who declined to be named, said would-be Honda lessees are being chased away. He said stores in the Detroit region have "no hooks to bring these people in."

Stores, the dealer said, are having difficulty making any money right now. Although Honda paid attention to detail with the Accord, the quality message is a tough sell when consumers are leasing it for only a few years.

"The quality gap has narrowed between the domestics, Honda and Toyota," the dealer said. "When you're buying a car, you have a great story to tell a customer. When you're leasing, they say, 'Well, it has at least three years of warranty on it.' They're just renting it anyway. It is an uphill battle."

A Honda spokeswoman said the automaker is listening to dealer concerns, while emphasizing that the company takes a disciplined approach to the market.

"We continue to work collaboratively with our dealer partners and appreciate our ongoing dialogue with them to ensure the overall value proposition with each of our products is competitive in the marketplace," the spokeswoman said in an emailed statement to Automotive News.

Honda has responded with flex-cash allotments that vary from store to store. The money can be used to sweeten deals for buyers across the lineup, but dealers say the extra cash can only go so far. One said the flex cash is merely a baby step, especially when the uncompetitive leasing problem remains.

While some dealers would like to see stronger leasing offers and other enhancers such as interest-rate specials, others think Honda is playing it smart with the Accord.

Brian Benstock, general manager of Paragon Honda in New York City, said Honda shouldn't treat the Accord like distressed merchandise. He said it's too early in the Accord's life cycle to throw money at it. And while other manufacturers are subsidizing sedan sales with incentives right now, he doesn't think that's a healthy long-term strategy.

"I get if the car needs incentives because of a deficiency in the car. But that car is hands down the best sedan Honda has ever made. Period," Benstock said.

"Do we need to have the same incentives that Nissan has or Toyota has? I don't think so. We have a better product. If given the choice between better product and better incentives, I'll take better product all day long."