HONDA for World Domination!

I have often said that as a salesperson, I have the easiest job on the planet, I sell Honda's which pretty much sell themselves. That has been especially true in this current market of high gas prices. Honda is positioned exceptionally well, with vehicles that are either at the top of their class in fuel efficiency or right up near the top. Here is a good read from Detroit News on some speculation of where Honda might just end up. Canadians, keep in mind that any numbers thrown around (mpg, $4/gallon,...) are all in US numbers, canadian numbers are different.

Honda's fuel-efficiency strategy pays off
Christine Tierney / The Detroit News

In recent years, while many automakers were building bigger and brawnier trucks and SUVs, Honda Motor Co. stuck to its core business of making fuel-efficient vehicles. Unlike its leading Japanese rivals, Honda passed on developing a full-size pickup. It didn't offer a powerful V-8 engine for its premium cars and SUVs either, focusing its resources instead on designing better versions of its stalwart Civic compact and tiny Fit.

That strategy is now paying off. This year Honda has clocked the best performance of any major player in the U.S. market. Its sales are up 4.8 percent in a market that contracted 8.4 percent in the first five months of 2008. In May, the Civic became the top-selling vehicle in the United States, displacing the longtime champion, Ford Motor Co.'s F-Series trucks, as consumers traded in gas guzzlers for more frugal models.

"They have an array of products that is in tune with today's economic climate," said Jim Hossack, a consultant at AutoPacific Inc. in Tustin, Calif. "They don't have a Suburban, they don't have a Super Duty, but they have small, fuel-efficient vehicles. They're in good shape."

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 (35-40 in Canadian numbers) miles per gallon in the city and 33-34 mpg (49-52 in Canadian numbers) on the highway.

This past weekend, Jim Kurtz, a software specialist living near Baltimore, struggled to track down a Fit for his daughter. "I called five dealers, and only one of them had the car," Kurtz said. "The demand is unbelievably high for these vehicles."

This year, Fit sales are up 64 percent, Civic sales are up 20.5 percent, and sales of the Civic hybrid are up 17.5 percent, according to Autodata Corp.

Honda's trucks, however, are not performing as well. The CR-V crossover is popular, but Honda has a tough time moving its boxy Element vehicles. They spend nearly three months on dealer lots, compared with a 56-day average for compact crossovers as a whole, according to J.D. Power and Associates' Power Information Network. Honda's midsize Ridgeline pickup is also a slow seller, and now carries $3,500 in incentives, according to online auto research firm Edmunds.com.

Sales of Honda's premium Acura vehicles have been weak, too, in the last months before the rollout of redesigned models.

But Honda cars are hard to keep in stock. "Particularly in this climate, where gas prices have spiked since mid-April, Honda is top of mind with consumers," said Mark McCready, vice president for market planning and pricing at online retailer Carsdirect.com. "Honda has for years positioned themselves in their marketing as being economical, with good fuel-economy, reliability and best cost of ownership."

Demand for Honda's midsize Accord sedan is strong, as SUV owners migrate to smaller -- but not much smaller -- vehicles. That shift explains why more Accord buyers are opting for V-6 than four-cylinder engines, Mendel said. Accord sales are up 9.4 percent this year, and ahead 38.9 percent in May.

With gas costing $4 a gallon, fuel economy is a top priority for consumers. Allen Chen, a vice president at a Silicon Valley firm, looked at small, fuel-efficient cars and hybrids. With hybrids, "the gas savings, even assuming $6 a gallon gas, didn't work out because of the extra cost of the car, and the cost of the battery replacement down the road," he said. Last weekend, Chen settled on a Civic with a 1.8-liter engine costing $17,865, including tax.

Honda's archrival Toyota Motor Corp. has many fuel-efficient models in its bigger lineup, but Toyota's performance has been hurt by weak demand for some of its larger vehicles, such as the new Tundra pickup. Toyota has slowed production of Tundras at its Indiana and Texas plants, and Nissan Motor Co. is also slashing output of light trucks in North America.

Compared with Toyota and Nissan, Honda has been more cautious in adding production capacity. But that trait is causing Honda to scramble to supply dealers with more cars. It is increasing Civic production at its Alliston plant in Ontario and it is opening a car plant in Indiana this fall.

But McCready says Honda may run short during the summer selling season. "They don't have the volumes or the inventories to do what they did in May for the rest of the summer."

You can reach Christine Tierney at ctierney@detnews.com.