Feature
Honda: Mainstream Meets Extreme
When Times Are Tough, People Turn to Honda
Suddenly Honda is a success — again. The 2008 Honda Civic became America's current best-selling vehicle in May, as some 53,299 examples hit the road in a single month. This is a new sales record for the Civic, almost 14,000 more cars per month than the previous record for the model that had been set just the year before.
When times are tough and gasoline prices rise, people come home to Honda. There's something unique about this company that seems to speak to Americans. As Toyota rose to its preeminent position in the last few years, there were those who despaired of Honda's future, as it seems so one-dimensional compared to diversified mega-corporations like Toyota. After all, Honda is just a simple little car company.
Yet now this simple little car company is promising the introduction of a new 50-mpg hybrid vehicle in 2009, one of four compact Honda hybrids that are expected to represent 500,000 sales a year by 2015. At the same time, it's developing a new front-engine NSX powered by a 550-horsepower V10 and featuring all-wheel drive. And Honda is equally capable of unexpected innovation, as with its unibody Ridgeline pickup truck, which more manufacturers are adopting as the template for fuel-efficient trucks in the future.
When the subject is sales, people talk about Toyota. But when the subject is cars, people talk about Honda.
Willing To Make Mistakes
Of course, Honda does make mistakes. When Honda unveiled the quirky Ridgeline pickup at the 2005 Detroit Auto Show, an enthusiastic automotive press corps drooled over such innovative features as the lockable trunk-in-a-bed and dual-action tailgate. A year later, the Ridgeline was the runaway winner of the 2006 North American Truck of the Year award.
But more than three years after its production launch, Americans have responded to the Ridgeline with a huge snooze, even as rapidly escalating gas prices this year have triggered a stampede of buyers out of traditional full-size pickups from Detroit brands into small, fuel-efficient vehicles, many from Asian brands.
And let's not talk about the Honda Accord Hybrid, which was meant to capitalize upon the (apparently nonexistent) enthusiasm Americans have for the idea of electric power as a performance-enhancing device, not an mpg-enhancing device. Then there was the Accord Hybrid's attempt to make its lack of a distinctive hybrid-style visual identity an asset on the showroom floor.
These are examples of the very few missteps from a relatively young Japanese manufacturer that has only been building cars since the early 1960s, yet has managed in the ensuing 45 years to establish a lofty reputation for engineering prowess and technical innovation. Since it first introduced the tiny, air-cooled N600 hatchback in the U.S. in 1969, Honda has piled one success on top of another, typically without a lot of fanfare or foofaraw.
It all comes from a willingness to think outside the box. Sometimes it wins and sometimes it loses, yet Honda is always willing to embrace things that are new and different.
The Payoff
The payoff has been unswerving customer loyalty.
"Honda has a very strong image, in terms of durability, reliability and [being] environmentally friendly," observes Tom Libby, senior director of industry analysis for J.D. Power & Associates. "One of the drivers of that image is that they've never used customer cash rebates in the U.S., which has helped to create high residual values. After three years of ownership, their products in general retain more of their value than any competitors."
Given that broad and loyal customer base, Honda watchers aren't surprised to see the automaker enjoying heady sales so far this year in the U.S., while many of its competitors — including such larger rivals as Toyota, General Motors and Ford — struggle to cope with drastic sales declines and what American Honda executive Dick Colliver describes as "one of the most profound shifts in automotive buying patterns in more than a decade."
Clairvoyance Through Consistency
Of course, Toyota might have more marketing muscle, deeper financial and technical resources and a much broader product portfolio than Honda. And it certainly has been a media darling, thanks in no small part to the ongoing popularity of its Prius hybrid. Yet this hasn't stemmed a months-long downturn in the automaker's U.S. sales. Honda, in the meantime, continues to rack up record sales in the American market, where the company posted a healthy 16 percent increase in May. Among compact crossover vehicles, the Honda CR-V is running away from the Toyota RAV4 and the Ford Escape, while the Odyssey minivan and the midsize Accord hold down the second spot in their respective segments.
If Honda seems suddenly clairvoyant, the foundation for its most recent triumphs has been carefully and consistently laid over four decades.
The Civic is a prime example. Introduced in the U.S. in 1972 as the successor to the N600, the compact series is now in its eighth generation and seems more attractive and capable — and more popular — than ever. Over several generations, Honda also has done its homework on such mainstream models as the Accord and the Odyssey, focusing on making the cars more powerful and efficient, more roomy and comfortable and, inevitably, more laden with features and content. That effort earlier this year won Honda high praise from Consumer Reports, which in April observed: "The best cars sold in the U.S. are made by Honda [whose] strength is its consistency."
Technical Innovation
True to its roots as an engineering-driven organization, Honda has also relentlessly pursued technical innovation as one of the brand's pillars. Nor has it been afraid to push the envelope to extremes, whether being the first Japanese automaker to assemble automobiles in the U.S. (the Accord in 1982), the first Japanese automaker to introduce a premium brand (Acura in 1986) or, most recently, the first automaker to crack the code with a practical prototype of a hydrogen-powered fuel-cell car, the FC-1 in 1999.
Now, of course, the test fleet of Honda FCX Clarity fuel-cell cars has gone into production on a dedicated assembly line in Japan for distribution in Southern California. Borrowing a page from Toyota's marketing playbook, the usually low-key Honda even has enlisted a handful of celebrities, including actress Jamie Lee Curtis and her filmmaker husband Christopher Guest, as the first high-profile U.S. customers for the FCX Clarity.
"Honda understands that fuel cells are potential game-changers, and their strategy in commercializing fuel-cell vehicles with more of a holistic approach, tying in the Honda home energy station, is brilliant," says Jim Hall, managing director of 2953 Analytics, an industry consulting firm based in Birmingham, Michigan.
A Greener Future
In addition to its pioneering development of fuel-cell vehicles and infrastructure, Honda has been laying the groundwork for a greener future with its new family of i-DTEC clean diesels, to be introduced next year in the U.S. in the Acura TSX.
Just as important, there's a new generation of hybrid gas-electric vehicles on the way, including a new Prius fighter still known generically as the Global Small Hybrid that should arrive in early 2009. Honda says the GSH — it will get a real name later this year — is a five-passenger, five-door hatchback styled along the lines of the FCX Clarity, intended mainly for the North American market and tipped to deliver more than 60 mpg. Honda's U.S. dealers also will get a version of the sporty CR-Z concept as well as a new Fit Hybrid that will bolster the current Civic Hybrid.
But Honda is not just about small, clean, fuel-efficient products. Which brings us back around to some sore spots and kinks that still need to be ironed out.
Performance Products
In marked contrast to its technical expertise, few observers would argue that styling and performance are among Honda's strong suits. Despite its successes over the years in motorsports, the company's track record with production sports cars has been abysmal; consider the slow-selling S2000 as well as the discontinued NSX and Prelude. Nor has Honda managed, despite its early three-year lead on Toyota and Lexus, to spin the Acura brand into a genuine competitor to BMW or Mercedes-Benz — a result underpinned in large measure by Honda's failure to create a true flagship luxury sedan to rival the 7 Series and the S-Class.
In true Japanese fashion, however, those Honda engineers in Tochigi and their marketing counterparts back in Tokyo haven't thrown in the towel just yet. A bigger, faster, rear-wheel-drive Acura RL sedan, powered by a 4.8-liter V8, is said to be in the pipeline for model-year 2011, while the next-generation NSX, due around the same time, reportedly will feature a brand-new V10 displacing around 5.0 liters.
Beyond Honda's ongoing brand-building effort, challenges remain. Not the least of them is how to turn the Ridgeline into the automotive equivalent of lemonade. To promote the unique features and positioning of the vehicle, Honda's advertising agency has developed a series of clever TV ads, including one of a family Thanksgiving dinner with the patriarch wielding a miniature Star Wars-style light saber to carve the turkey. The theme: Tradition Meets Innovation. A second tongue-in-cheek spot shows a grubby Chuck Norris, the martial-arts actor, crashing a genteel tea party, with the tagline "Tough Meets Classy."
Suggestion for the next spot: An FCX Clarity motoring into the drive-through at McDonald's. Tagline: Extreme Meets Mainstream.
When times are tough and gasoline prices rise, people come home to Honda. There's something unique about this company that seems to speak to Americans. As Toyota rose to its preeminent position in the last few years, there were those who despaired of Honda's future, as it seems so one-dimensional compared to diversified mega-corporations like Toyota. After all, Honda is just a simple little car company.
Yet now this simple little car company is promising the introduction of a new 50-mpg hybrid vehicle in 2009, one of four compact Honda hybrids that are expected to represent 500,000 sales a year by 2015. At the same time, it's developing a new front-engine NSX powered by a 550-horsepower V10 and featuring all-wheel drive. And Honda is equally capable of unexpected innovation, as with its unibody Ridgeline pickup truck, which more manufacturers are adopting as the template for fuel-efficient trucks in the future.
When the subject is sales, people talk about Toyota. But when the subject is cars, people talk about Honda.
Willing To Make Mistakes
Of course, Honda does make mistakes. When Honda unveiled the quirky Ridgeline pickup at the 2005 Detroit Auto Show, an enthusiastic automotive press corps drooled over such innovative features as the lockable trunk-in-a-bed and dual-action tailgate. A year later, the Ridgeline was the runaway winner of the 2006 North American Truck of the Year award.
But more than three years after its production launch, Americans have responded to the Ridgeline with a huge snooze, even as rapidly escalating gas prices this year have triggered a stampede of buyers out of traditional full-size pickups from Detroit brands into small, fuel-efficient vehicles, many from Asian brands.
And let's not talk about the Honda Accord Hybrid, which was meant to capitalize upon the (apparently nonexistent) enthusiasm Americans have for the idea of electric power as a performance-enhancing device, not an mpg-enhancing device. Then there was the Accord Hybrid's attempt to make its lack of a distinctive hybrid-style visual identity an asset on the showroom floor.
These are examples of the very few missteps from a relatively young Japanese manufacturer that has only been building cars since the early 1960s, yet has managed in the ensuing 45 years to establish a lofty reputation for engineering prowess and technical innovation. Since it first introduced the tiny, air-cooled N600 hatchback in the U.S. in 1969, Honda has piled one success on top of another, typically without a lot of fanfare or foofaraw.
It all comes from a willingness to think outside the box. Sometimes it wins and sometimes it loses, yet Honda is always willing to embrace things that are new and different.
The Payoff
The payoff has been unswerving customer loyalty.
"Honda has a very strong image, in terms of durability, reliability and [being] environmentally friendly," observes Tom Libby, senior director of industry analysis for J.D. Power & Associates. "One of the drivers of that image is that they've never used customer cash rebates in the U.S., which has helped to create high residual values. After three years of ownership, their products in general retain more of their value than any competitors."
Given that broad and loyal customer base, Honda watchers aren't surprised to see the automaker enjoying heady sales so far this year in the U.S., while many of its competitors — including such larger rivals as Toyota, General Motors and Ford — struggle to cope with drastic sales declines and what American Honda executive Dick Colliver describes as "one of the most profound shifts in automotive buying patterns in more than a decade."
Clairvoyance Through Consistency
Of course, Toyota might have more marketing muscle, deeper financial and technical resources and a much broader product portfolio than Honda. And it certainly has been a media darling, thanks in no small part to the ongoing popularity of its Prius hybrid. Yet this hasn't stemmed a months-long downturn in the automaker's U.S. sales. Honda, in the meantime, continues to rack up record sales in the American market, where the company posted a healthy 16 percent increase in May. Among compact crossover vehicles, the Honda CR-V is running away from the Toyota RAV4 and the Ford Escape, while the Odyssey minivan and the midsize Accord hold down the second spot in their respective segments.
If Honda seems suddenly clairvoyant, the foundation for its most recent triumphs has been carefully and consistently laid over four decades.
The Civic is a prime example. Introduced in the U.S. in 1972 as the successor to the N600, the compact series is now in its eighth generation and seems more attractive and capable — and more popular — than ever. Over several generations, Honda also has done its homework on such mainstream models as the Accord and the Odyssey, focusing on making the cars more powerful and efficient, more roomy and comfortable and, inevitably, more laden with features and content. That effort earlier this year won Honda high praise from Consumer Reports, which in April observed: "The best cars sold in the U.S. are made by Honda [whose] strength is its consistency."
Technical Innovation
True to its roots as an engineering-driven organization, Honda has also relentlessly pursued technical innovation as one of the brand's pillars. Nor has it been afraid to push the envelope to extremes, whether being the first Japanese automaker to assemble automobiles in the U.S. (the Accord in 1982), the first Japanese automaker to introduce a premium brand (Acura in 1986) or, most recently, the first automaker to crack the code with a practical prototype of a hydrogen-powered fuel-cell car, the FC-1 in 1999.
Now, of course, the test fleet of Honda FCX Clarity fuel-cell cars has gone into production on a dedicated assembly line in Japan for distribution in Southern California. Borrowing a page from Toyota's marketing playbook, the usually low-key Honda even has enlisted a handful of celebrities, including actress Jamie Lee Curtis and her filmmaker husband Christopher Guest, as the first high-profile U.S. customers for the FCX Clarity.
"Honda understands that fuel cells are potential game-changers, and their strategy in commercializing fuel-cell vehicles with more of a holistic approach, tying in the Honda home energy station, is brilliant," says Jim Hall, managing director of 2953 Analytics, an industry consulting firm based in Birmingham, Michigan.
A Greener Future
In addition to its pioneering development of fuel-cell vehicles and infrastructure, Honda has been laying the groundwork for a greener future with its new family of i-DTEC clean diesels, to be introduced next year in the U.S. in the Acura TSX.
Just as important, there's a new generation of hybrid gas-electric vehicles on the way, including a new Prius fighter still known generically as the Global Small Hybrid that should arrive in early 2009. Honda says the GSH — it will get a real name later this year — is a five-passenger, five-door hatchback styled along the lines of the FCX Clarity, intended mainly for the North American market and tipped to deliver more than 60 mpg. Honda's U.S. dealers also will get a version of the sporty CR-Z concept as well as a new Fit Hybrid that will bolster the current Civic Hybrid.
But Honda is not just about small, clean, fuel-efficient products. Which brings us back around to some sore spots and kinks that still need to be ironed out.
Performance Products
In marked contrast to its technical expertise, few observers would argue that styling and performance are among Honda's strong suits. Despite its successes over the years in motorsports, the company's track record with production sports cars has been abysmal; consider the slow-selling S2000 as well as the discontinued NSX and Prelude. Nor has Honda managed, despite its early three-year lead on Toyota and Lexus, to spin the Acura brand into a genuine competitor to BMW or Mercedes-Benz — a result underpinned in large measure by Honda's failure to create a true flagship luxury sedan to rival the 7 Series and the S-Class.
In true Japanese fashion, however, those Honda engineers in Tochigi and their marketing counterparts back in Tokyo haven't thrown in the towel just yet. A bigger, faster, rear-wheel-drive Acura RL sedan, powered by a 4.8-liter V8, is said to be in the pipeline for model-year 2011, while the next-generation NSX, due around the same time, reportedly will feature a brand-new V10 displacing around 5.0 liters.
Beyond Honda's ongoing brand-building effort, challenges remain. Not the least of them is how to turn the Ridgeline into the automotive equivalent of lemonade. To promote the unique features and positioning of the vehicle, Honda's advertising agency has developed a series of clever TV ads, including one of a family Thanksgiving dinner with the patriarch wielding a miniature Star Wars-style light saber to carve the turkey. The theme: Tradition Meets Innovation. A second tongue-in-cheek spot shows a grubby Chuck Norris, the martial-arts actor, crashing a genteel tea party, with the tagline "Tough Meets Classy."
Suggestion for the next spot: An FCX Clarity motoring into the drive-through at McDonald's. Tagline: Extreme Meets Mainstream.
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