Honda Motor Company observes increased sales amidst economic slowdown and rising fuel price

In the middle of sub-prime economic crisis and high fuel price in the USA, Japan’s second largest auto maker Honda Motor Company Limited (TYO: 7267) is observing a consistent rise in its car sales. This is truly a big achievement for the company. In an email to the analysts, the company said that the company’s US sales in the first 20 days of June 2008 was higher than last year. Thanks to its latest models of fuel efficient small vehicles.

The email said that Honda’s total sales in the USA rose by 16% in the first 20 days of June. However, Chris Martin, Honda spokesperson could not confirm the email. Honda is among the top five automakers that has observed increased sales in the USA this year. The $4 per gallon gasoline has forced consumers to buy fuel efficient vehicles. Like other USA automakers, Honda does not depend heavily on large vehicle sales. Truck sales makes up less than 40% of its total vehicle sales. The Sydney Morning Herald reports:

''Honda may raise its profit forecast at the half-year point,'' said Takashi Aoki, who helps manage about 130 billion yen at Mizuho Asset Management. ''It may also increase production capacity for the Civic and Accord.''

Through May, Honda's US sales gained 4.8%, compared with an industry decline of 8.4%, according to Autodata. Last month the Civic was the top-selling vehicle in the US, besting Toyota's Corolla and Camry sedans.

The email further says that Honda civic, Honda Accord and Honda Fit are the top selling models of the company. However, sales of the light truck models are down due to fuel crisis and economic slowdown. The car sales went up by 37%.

According to Detroit based Honda spokesman, Chuck Schifsky, the demand of Honda Civic is so high that the company is facing a very tough time to meet the demands.

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Hyundai Elantra SE scores “Excellent” in Consumer Reports’ road test

Hyundai Elantra SE has been chosen as the best car by the July issue of the famous US magazine for consumers, Consumer Reports. The Hyundai Elantra SE scored “Excellent” in the overall road test score by the Consumer Reports. Along with Hyundai Elantra SE, three other cars: Toyota Corolla, Subaru Impreza and Ford Focus achieved “very good” ratings. The test was conducted over a group of Sedans.

The redesigned Toyota Corolla achieved 32 mpg in the CR fuel economy test. This is the best gas mileage observed by CR in a conventional gasoline powered car with automatic transmission. The smaller Honda Fit scored similar gas mileage followed by Toyota Yaris, which achieved 33 mpg. infozine.com reports

Two Chevrolets were also tested as part of this group, the Cobalt and Aveo. Both ranked near the bottom of the pack. Among compact sedans, the Cobalt ranks 17th out of 19 vehicles tested. Among subcompacts, the Aveo ranks last among the 12 vehicles tested.

Prices for the six cars in CR's tests range from $16,205 for the subcompact Aveo LT to $19,106 for the Impreza 2.5i which is all wheel drive. Even with prices under $20,000, the best of today's small cars provide many convenience features, comfortable interiors, good refinement, and improved fuel economy.

You will get the full report in the July issue of Consumer Reports magazine that has gone on sale on June 3. The magazine conducted the test over 31 small sedans and 21 top used cars.

The Hyundai Elantra SE also took the top position in Consumer Report’s April issue. The car outperformed Honda Civic EX by one point. Compared to Honda Civic EX’s manual transmission, Hyundai Elantra SE comes with standard electronic stability control. This is a great safety feature of the car.

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Honda is scoring big times in the USA auto market

With the high fuel price, America has become an open field for small fuel efficient cars and Honda has become the big player in this field. The small cars of Honda are now selling very quickly all over the USA. Instead of going for big cars and better performing engines Honda Motor Company Limited (TYO: 7267) focused on its small subcompact cars. Now Honda has got the best performance in the USA auto market. It sales grew up 4.8%. In May, Honda Civic became the top selling vehicle in the USA displacing Ford’s F-Series trucks. According to Jim Hossack, consultant, Auto Pacific Inc. Honda’s products are well tuned with the condition of the current market. They are not offering Super Duty or Suburban but small fuel-efficient vehicles. Det News.com reports:

Honda could sell even more vehicles in the United States if the Japanese automaker shipped more small cars to its American Honda Motor subsidiary. Fit subcompacts are sold within five days of reaching showrooms, said John Mendel, executive vice president at American Honda. But Honda is also scrambling to meet demand in Japan, where the Fit is the best-selling vehicle. "Sixty percent of the world market is small cars. We compete with the rest of the world for the Fit," Mendel said. It gets 27-28 miles per gallon in the city and 33-34 mpg on the highway.

Sales of Honda’s Fit subcompact has increased 64%, Civic 20.5% and Civic hybrid 17.5%. Honda may be doing well in its small vehicles section but its bigger vehicles are not performing well. Though cross over CR-V are quite popular but still, Honda is having a tough time selling its big vehicles. Honda’s midsize Ridgeline pickup, premium Acura are slow sellers but overall Honda cars do not spend much time in dealers lots in the USA now days.

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Ford, GM, Chrysler are losing market to Honda and Toyota

Honda Motor Company (TYO: 7267) is trying to make a turn around with its hybrid models and this means more loss of market shares for American automakers especially, the famous ‘Detroit Three.’ In 2009, Honda Motor Company is planning to release hybrid models that will cost only$1900 (€1,206). Honda is also planning to bring out the hybrid version of its popular Fit subcompact vehicle. Jesse Toprak, chief industry analyst, Edmunds.com referred Honda’s strategy as a ‘game-changer for the short term’. Currently, Honda has the most fuel-efficient car models in the USA market. The company will sell its new hybrid only cars in USA, Japan, and Europe from next year but it has not determined anything about the Fit subcompact hybrid. International Herald Tribune reports:

In addition to the new model and the Fit, Honda will introduce several other hybrids: a Civic and a new sporty model based on the CR-Z, Fukui said.

Fukui refused to give the price for the new hybrid-only vehicle.

But he said the difference between hybrids and their comparable standard models should be kept within 200,000 yen ($1,900, €1,206), although such price gaps can now reach as much as 500,000 yen ($4,800, €3,047).

"The 200,000 yen difference is a must," Fukui said.

Hybrids deliver a cleaner, more efficient ride by switching between a gas engine and an electric motor at different speeds, and by recycling the energy the car produces as it moves.

Honda aims at selling 200,000 ‘entry-level’ hybrid cars every year. To make the cars cheaper, the company has introduced a new electronic control unit and thinner and more compact battery. It is also developing a thinner motor.

North American car companies are good at making big vehicles like trucks and SUVs. With the rising cost of fuel American people are shifting towards smaller fuel-efficient cars.

Michael Robinet, vice president, Global Forecast Services for CSM Worldwide, an auto industry consulting company in Northville, says that GM and Ford could rely on their European and Asian operations for small car expertise. Chrysler has joined with Nissan to release small cars by 2010. GM is focusing on its larger hybrid vehicles and plug-in car Chevrolet Volt which will be released in 2010. Ford is planning to release midsize hybrids next year.

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Honda decides to buy more foreign made auto parts

To make its products more competitive in the market and reduce the production cost, Honda Motor Company Limited (TYO: 7267) Japan’s second largest automaker, announced that it will buy auto parts from abroad. On Wednesday, Honda also declared to reform its manufacturing processes to boost efficiencies. The new production standards and procedures will be introduced at the company’s Yorii car plant which is now under construction. Reuters reports:

"The issue is how much of the rest of the components, which account for 80 percent of the total, we can procure globally," he said in a group interview. That would include components made overseas by Japanese parts makers as well as those made by local firms, he said.

"For motorcycles, the (parts) infrastructure is in place in Thailand, China, Vietnam and many other places, so we're able to do this. Achieving the same with cars is going to be key."

The company raised the portion of foreign auto-parts from 5% to 17% for its Fit subcompact car. Honda's president, Takeo Fukui said that they were supplying technology to their joint venture partners in China. Another Japanese automaker, Nissan Motor Company (TYO: 7201) is also bringing in parts made from China, India.

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Honda goes hybrid once again

Even I used to think that Toyota Motor Corporation (TYO: 7203) is the pioneer in hybrid vehicles but that is not true; it is the second largest Japanese automobile producer, Honda Motor Company Limited (TYO: 7267), who first introduced hybrid car in the USA. In 1999, Honda rolled out its first hybrid model, the Honda Insight but it was not very successful. Now, looking at Toyota’s success, the company is gearing up again with new hybrid models. On May 21, Honda CEO Takeo Fukui told reporters that by 2010, Honda is planning to sell 500,000 hybrid cars per year. Honda is planning to bring out the Hybrid version of its popular Fit Subcompact. Business Week reports:

First up will be Honda's long-awaited dedicated hybrid car. Seating five, it will be a five-door model with an exterior design based on Honda's sleek FCX Clarity fuel-cell car, which it plans to begin leasing later this year in the U.S. and Japan.

The new car will go on sale in early 2009 and will use a traditional gasoline engine as its main power source, tapping an electric motor during startup and acceleration. It will be launched in Japan, North America, and Europe at an "affordable price," which Fukui says means customers will be thinking about more than just image when they make their buying decision. "This hybrid vehicle will be chosen rationally by customers based on its economic benefit," he says. Annual production is scheduled to be 200,000 vehicles a year, around half of which will be sold in the U.S.

The five-door model will be followed by a sporty hybrid and a new version of the popular Civic hybrid in 2010.

The main problem is, though Honda is optimistic to compete with Toyota, Toyota Motor Corporation is in far better position than Honda dominating majority of North American Hybrid market. At this point, the other option for Honda is going for electric plug-in vehicles like Nissan but Honda is not interested in electronic vehicles. According to Fukui, the major drawback of the electric vehicles is the low powered battery. Unless there is some major technological advancement in the battery, the plug-in cars will not be much popular.

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