Honda cuts back Accord output to reduce inventory
Honda may have built its best sedan ever in the 2018 Accord, but the automaker must face a tough reality: Sales are down and some in its vocal dealer network are sounding the alarm.
In response, Honda said it's trimming Accord production in Marysville, Ohio, but isn't committing to any new incentive programs.
- Honda is cutting Accord output in Marysville, Ohio, to reduce inventory.
- Brand chief Henio Arcangeli blamed the Accord's struggles on the segment's decline and competitors' heavy incentive spending.
- Honda isn't inclined to dole out more incentives to boost Accord sales.
"There's a little bit more in the dealer channel than we would like, so we've started reducing our production a little bit to match inventory with what's going on in the marketplace," Henio Arcangeli Jr., senior vice president of the automobile division of American Honda Motor Co., said after the make meeting at the NADA Show. "The true story here is we do this with all of our products all the time."
U.S. Accord sales are down 13 percent this year in a midsize car segment that is down 15 percent. Inventories stood at a 103-day supply on March 1 — high by any standards, let alone Honda's typically sparse count.
Dealers around the country say a lack of enticing lease offers is a key reason for slower-than-expected sales of the reigning North American Car of the Year, pointing to more attractive lease deals on the rival Toyota Camry. Honda lists a standard three-year Accord lease on its website 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.
Arcangeli, who came to Honda in December to succeed Jeff Conrad, said the Accord is doing "very well" in some markets but admitted it's "struggling a little" in some key leasing markets. Those include Florida, New York, Ohio and California, according to dealers. Sources said Miami-area dealers have turned down around 1,000 new Accords, and some California stores have done the same.
Dealers are looking for incentive help, especially with leasing, but Arcangeli said it's not in Honda's nature to throw huge money at products to charge sales.
"Honda's principle is to develop leadership products, position correctly in the marketplace and support with great marketing," Arcangeli said. The Accord "has performed very well. The challenge has been that the overall midsize segment is about 15 percent lower than last year. There's also competitors that are spending close to $100 million a month on incentives, and that's not Honda's business model."
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