Redesigned Insight a lure for sedan buyers?

TOKYO — Honda Motor Co. has been enjoying strong minicar sales here in its small-car-heavy home market. But that success has caused the company to think hard lately about its identity as a carmaker.

The problem is that Japan is undergoing a consumer preference shift.

While American shoppers are switching from sedans to crossovers, young Japanese consumers are turning from stylish cars to minicars.

To get back to its roots as a maker of sporty cars that promise driving performance, Honda is pinning hopes on its new Insight sedan to underscore "a fundamental value of automobiles."

It is also exploring a new way to reach potential sedan customers.

The Insight is already getting public acclaim, winning the 2019 Green Car of the Year award at the Los Angeles Auto Show in late November.

Kimiyoshi Teratani, Honda operating officer in charge of Japan operations, said the third-generation Insight embodies driving feel and good design in one package. "Fuel economy, driving and design — we have sought to strike the right balance among these three elements at high levels," he said.

In the U.S., the model is targeted at younger users with no families to drive around. But in Japan, the Insight is pitched to people in their 40s and 50s who are more familiar with driving sedans, Teratani said.

In Japan, young people have shown less interest in buying cars, and many users have been opting to drive minicars. Of the top 10 sellers in the first half of this year, seven were minicars, with the Toyota Prius as the only sedan, in eighth place.

Honda has benefited from the minicar boom. Its N-Box series was the market's best-selling model in fiscal 2017 and for the first half of fiscal 2018, according to the Japan Light Motor Vehicle and Motorcycle Association.

Japanese consumers are also increasingly gravitating toward sport utility vehicles, just like their counterparts in the U.S., thus cutting further into the market for sedans, which have made Honda globally successful.

It is fair to ask the question: Is this the best time for Honda to introduce another sedan?

Teratani acknowledged that the overall sedan segment is shrinking at home, but he said customers now have more diverse choices in the sedan segment.

"The new Insight is neither an ordinary sedan nor an ordinary environmentally friendly vehicle," he said. "I think this is more like a luxury sports-car-type model."

He believes that short-term rental programs can be an effective way to help lower a psychological barrier and make it easier for Japanese consumers to try driving the redesigned Insight and experience its smooth acceleration firsthand.

Honda has operated its own short-term rental service EveryGo since November 2017 in Tokyo, Yokohama and other regions. The company is considering a plan to make the Insight available for EveryGo service stations in shopping centers and similar places.

"It's like sowing a seed. We hope to work on services like car-sharing that could help expand our domestic sales," Teratani said.

Honda is targeting Insight sales of 12,000 units a year in Japan and hopes to sell more than 20,000 vehicles a year in North America.