Honda Losing Its Way at a Bad Time

Honda should be having a better year with Toyota down but appears to be losing its way in spite of claims from the company that everything is going just fine.

An article in Automotive News (subscription required) points out that “Instead of gaining on its rivals, Honda's U.S. retail and overall share are down this year. Honda brand sales are up just 4 percent through November, in a market that's up 11 percent.”

Buried deep in the story are two nuggets of information that point out why Honda is not doing as well at it should be: marketing and styling. Honda has become the General Motors of marketing and styling circa the 1980s. Retro comparisons are not a good thing when it comes to GM.

In the 1980s, GM produced vehicles like the Chevrolet Citation that were bland and not much fun to drive. The current generation Accord (see picture) is bland and not much fun to drive. The new Honda Odyssey, in spite of what Honda tries to tell you, is bland and not much fun to drive just like any minivan the General produced in the late 80s and early 90s.

Honda is a big company so it’s tough for it culturally to adapt, but Ford has done it pretty well. It needs to rip a page from the Blue Oval’s playbook (or even Hyundai’s) and start building cars that people care about in segments that automotive influencers care about. Right now that would be the B-class (cars like the Ford Fiesta, Mazda2, Hyundai Accent, Honda Civic and Nissan Versa) and the crossover segment (vehicles like the Hyundai Tucson, Kia Sportage, Ford Escape, Nissan Rogue and Honda CR-V). In both instances, Honda is the old kid on the block. Nobody feels invested in their products.

To top it off, Honda is having trouble marketing its vehicles. The Honda Accord Crosstour is an extremely good vehicle, but its design is polarizing (i.e. some think it’s butt ugly) and its price is high. Honda seems to have the “Field of Dreams” attitude that GM had until just recently: “If you build it, they will come” to the dealerships. Honda seems to think people are going to flock to their dealerships just because they’re selling Hondas. Americans no longer flock like sheep. Younger buyers have no brand loyalty. They’re going to shop around. Buyers still want to be sold on looks, value and price. Honda is only succeeding on value.

Finally, Honda is going after what it deems a white-hot minivan market. There are predictions of strong growth in the segment; however, as reported on TorqueNews, the entire automotive segment is poised to hit 17.5 million sales by 2015. The minivan segment is going to grow but not at a rate exceeding industry growth.

Keep an eye on Honda. Strong sales incentives, vastly improved Civic and CR-V, and a marketing campaign you remember will all be signs it’s read the tea leaves and is ready to change direction. Otherwise, its market share (something Honda professes not to care about) could continue to dwindle.