Has Honda's run - run out?

varmint

Mariner - I understand what you're writing. That's not the problem. I simply disagree with the conclusion you've drawn.

If the use of incentives is linked closely to corporate profitability, then why are the highest incentives coming from GM, Ford, and Chrysler?

You keep trying to use the Harbour Report as evidence to confirm profitability, but I get the feeling you don't really understand the limitations of the report. Go to their website and take a closer look. Just for example, here's a quote from the section on assembly.

"Only the companies that fully participated with all of their North American plants were included in the company rankings (plant rankings continued to include all participating plants). Nissan was not included in the company rankings because its operations in Mexico and Canton, Miss., did not participate in the report measures. Honda and Toyota also were not included in the rankings. Honda's Alliston #1, Alabama, and Mexico plants did not participate in this year's report, nor did Toyota's assembly plants in Princeton, Ind., and Cambridge, Ont., South."

Finally, keep in mind that the profitability of the products produced at the participating plants is based on the markets where they are sold. Not all cars produced in North America are sold in the USA. Yet, you're using the data to support a conclusion about incentives in the US market.

varmint

I had the tranny replaced in my wife's 2001 TL. I think we got about 65K miles out of the first one. They fixed it without a fuss. We've now got about 80K on the car.

Are we concerned that the tranny might go after the 100,000 mile extended warranty Acura has issued? Sure.

Would we have the same concerns about a Ford or Chrysler with more than 100,000 miles on it? You betcha.

ateixeira

Might be on its 3rd. :P

But seriously, one of my neighbors is in carpet sales and he gets fleet vans, Grand Caravans, and van after van doesn't give him more than 80k on a tranny.

-juice

davem2001

I had a '90 Integra that went over 160K miles, would probably still be going but was totalled in a wreck.

I still have a '92 Integra that has 130K miles and is going strong.

My brother in law has a '93 Accord with over 200K miles.

I don't get that same feeling with my TL. I have more confidence that my old '92 Integra will go to 200K and beyond than I do in my 2002 TL that has around 35K right now. Like I said, it's disappointing. I bought the TL expecting it would last as well as my older Honda/Acuras, but having the trans fail at 30K doesn't give me a warm fuzzy feeling about it.

ateixeira

Was that a Golden Era, though? Early 90s were great, that was just before cost-cutting ran rampant throughout the industry. I'm sure people here could rattle off lists of things that disappeared from these cars in the mid 90s.

Plus it was pre-ODB2, so you didn't see all the check-engine lights you hear about today. Cars were lighter and that put less strain on the powertrain. Not to mention you weren't competing for road space with 3-4 ton monsters.

The TL is heavier and pulls that weight quicker, all while having to meet tighter emissions standards. Those levels of power and weight were things Honda just didn't have much experience with. The original Legend had 170hp IIRC, and probably polluted 10 times as much as the TL.

It's hard to match cars from that era because of all the new requirements placed on the new ones.

-juice

mariner7

"If the use of incentives is linked closely to corporate profitability, then why are the highest incentives coming from GM, Ford, and Chrysler?"

That's why I emphasize there are two TOTALLY different ways to use incentives. The Detroit way is borne out of desperation. Nissan and Toyota are hardly desperate. By all measures they're the two most profitable automakers in the world. They use incentives to capture market share, because they're the most efficient and profitable.

Of course Harbour reports have limitations, but globally we know Honda is not as profitable as its two rivals. And Honda is markedly absent from the most efficient plants as ranked by Harbour.

I'm just saying there's a very good reason why Honda is not willing to match Nissan/Toyota's incentives: because Honda's profitability isn't on par with the other two. You think Honda's willing to concede growth and market share because it doesn't like incentives in principle. No, I don't think so. This has everything to do with money and profits, nothing to do with philosophy and principles.

gee35coupe

I feel the same way about my 03 Civic SI. I love the durn thing to pieces. But I just don't get the same feeling that my countless 100K+ mile Civics and Integras gave me. It just doesn't have the same Hondaness. I even feel it more in our 04 EX-L 5 speed but I feel like I would still rather have a 93 EX.

ateixeira

Another things is the low cowls are gone, and if you look the windows have gotten smaller. I think people are supposed to feel safter with more metal and less glass surrounding them.

Park a new TL next to an old one. What strikes me is that - how much smaller the windows are now.

-juice

gee35coupe

Additionally...Honda may just well be happy with the level of profitablility they are getting. I don't know the WHOLE truth but they sure aren't giving rebates yet.

Honda America is only down .4% from best selling year ever totals. They are doing fine.

ateixeira

You can't break records every year, you will have up and down cycles. Being that close to your peak is a good sign, not a bad one, IMO.

-juice

varmint

A. The use of incentives is good because it means more profits via volume rather than profits per unit.

B. The use of incentives is bad because it's better to to make more money per unit than sell more units.

Rather than philosophies, let's call these "profit strategies". As Mariner correctly stated, it's all about profits. So, which one is correct?

nippononly

make a blanket statement that either one is better? I think it would vary from situation to situation, and the only way to know would be to try an incentive for a short time and see its effect. I am sure it would work much more effectively to do an incentive on a volume model (Accord/Civic) than smaller lines, because (a) everyone else is doing them, and buyers shopping a mainstream product just expect to see cash on the hood nowadays, and (b) you have the sales stream in place to dramatically increase sales volume should the incentive bring the buyers in droves. The only problem is, aren't profit margins generally smaller the higher-volume the model is?

The larger problem is, unless your model has tangible advantages over its peers that you can point to and people will pay extra for, the only way to spur sales of a lagging model is to either redesign it early (a slow process with a lot of lag time) or put on some incentives (an instantaneous process with only the lag time necessary to throw some ads together to promote it).

alfox

If you drop prices 5% (e.g. incentives) to induce volume how much added volume do you need to reach even the same profit as before?

grbeck

On a different note, I just stopped at the dealer to look at the 2006 Hyundai Sonata.

Not a bad-looking car, and won that will definitely put the Hyundai brand on more shopping lists. But I don't want to hear any Hyundai fans criticize the Accord's styling. It's obvious that somebody at Hyundai sure likes it. As they say, imitation is the sincerest form of flattery...

gee35coupe

That car is very nice. The Camcord has some serious competition now. Let's see if Hyundai can hold the price differential though now that they are building them in Alabama. How do they sell cars so cheap?

anonymousposts

absolutely NOOOOO original styling anywhere on the car. That is going to hurt Hyundai because they have no brand recognition. It looks like an Accord from the back and an old A4 from the front/sides. the interior screams CamCord as well. And it still doesn't have the pulled together engineering of the CamCord. When you sit in an Accord or look at the outside you can tell the car was built with the whole package in mind. Same for the Camry. But you don't get that feeling from the Sonata. It is cheap though and the first Hyundai in a while that I would even consider test-driving.

grbeck

People aren't buying Hyundais for their distinctive styling now, so I doubt that copycat styling on the new Sonata will hurt it.

I can see this car keeping current Hyundai owners in the fold, and attracting customers from weaker companies, such as Mitsubishi. But I would agree that it is unlikely to steal many customers from Honda and Toyota.

Still, it shows that Hyundai continues to make great progress, and Honda and Toyota had better be looking over their shoulders.

hpmctorque

"...Honda and Toyota had better be looking over their shoulders." I agree with you, but would qualify this by adding that the threat for Toyota and Honda would become more significant if Hyundai went from being imitative to innovative. There aren't many signs of that yet. In discussing Hyundai's prospects with a Korean engineer recently, he expressed the opinion that the Japanese brands will maintain the lead for the foreseeable future because their R & D budgets exceed Hyundai's by a large margin.

ateixeira

alfox: it's not that simple. You can't just hope to increase sales by 5% because your COGS (cost of goods sold) goes up as well. We'd have to know the actual profit per unit with and without the rebates, as well as the volume of sales (again, with and without), to figure it out.

Gosh, I sound like a bean counter. :P

The Sonata came out a bit bland but a lot of customers like that. Keep in mind that Kia will make their version and that should be sportier, so they may be leaving the controversial/stylish version to Kia.

-juice

varmint

Exactly, it depends on the situation. (You're taking all the fun out of this.)

If grabbing marketshare (or defending it) via the use of incentives were the best path to profitability, Honda would be offering them. But there's more than one way to skin a cat.

Gaining marketshare is good because you have a wider audience and more chances to earn loyal customers. The flip side is what we see happening with the domestics... customers won't buy without cash on the hood. The brand's image is reduced to a bargain brand.

Holding prices is good because the vehicles hold their resale value, maintain their brand image, and retain the higher profit to vehicle ratio. The flip side being fewer units sold and sales going to the competition.

Which method is used depends on the goals of the company as well as their strengths and weaknesses. Apparently, Honda is not overly concerned with marketshare for the Accord and Civic. At least, not right now.

hpmctorque

If Toyota raises prices, as they've indicated they will recently, Honda can gain a relative advantage against its main rival by leaving its prices alone.

Further, just in the past couple of days I read that Honda's manufacturing capacity in North America is close to maxxed out, and to increase production would require an additional plant. Maybe Honda would refer to not increase its break even by adding a new plant, unless they're confident that demand would increase sufficiently to justify it. In other words, for a small volume increase Honda may be better off keeping its prices higher, and not adding capacity.

ateixeira

I think they are full of hot air, why talk about increasing prices when you have rebates on your products? Just stop offering rebates?

They'll increase prices by $500 and then bump the rebates up $500 to offset the increase - net zero change.

-juice

nippononly

some of the press picked up on the remarks that the former chairman made about GM needing Toyota's help with price competition, and then reported it as if this is really Toyota's plan, which I believe is erroneous. There has not been any new anouncement by Toyota in reference to this since it officially contravened those comments.

I bet Honda could find ways to increase profitability on Accord and Civic (make more equipment standard on each trim and then raise the price, perhaps?), to offset drops in sales.

varmint

The Toyota honcho who keeps making these comments is not part of the daily operations. He's at the board of directors level, not a direct part of the brand management.

Also, there is some concern that Toyota altering their prices for GM's benefit would amount to price fixing.

ateixeira

Heads up, Accord face-lift pics are floating around the web...

Revised tail looks a lot better. The taillights no longer look like they are upside down. They moved the lights to the sides, no longer on the trunk lid.

Sedan looks a bit more like the coupe now.

Nice update.

-juice

davem2001

To me, the front end is the problem - this is just me, but turn signals should ALWAYS be either beside or beneath the headlights, NEVER above.... I don't like it on the Accord, I don't like it on the GM trucks, I didn't like it on the Chrysler 5th Ave or whatever exactly it was (Andre?) that had them back in the 80s.

But I do agree, the rear of the coupe is nicer than the sedan, so that would be an upgrade.

andre1969

those turn signals above the headlights on the Mopar M-bodies, too. The '77-81 LeBaron and '82-89 Fifth Ave did it, and there was a trim level of the Diplomat called the SE, that had that same awful treatment from '85-89. I much preferred the front-end of the Gran Fury and regular Diplomats.

Another place I always hated the turn signals is BETWEEN quad headlights. Oldsmobile did this in '67-68 on the Cutlass, and Pontiac did it on the '77-80 Grand Prix and the '80-81 Catalina/Bonneville.

On the Accord, the turn signals don't really bother me because they seem pretty well-integrated into the whole headlight assembly, so as not to stick out too much. My biggest concern is that the whole assembly is just too BIG. I think if they toned down the headlights a bit, and made the grille a little bigger, it would help a lot.

On a similar note, has the Civic been recently revised? The other day I saw a Civic coupe with a blacked-out grille with a plastic mesh pattern, instead of the usual big, bulky, body-colored horizontal bars. It looked pretty nice, IMO. Maybe it's just a sporty trim level?

varmint

When I first read Juice's comment about looking like THE coupe, I thought he meant the new model looked more like A coupe.

I've always thought trying to emulate coupe-like styling was the current Accord's downfall. Coupes typically have a long hood, rakish profile, and short deck lid. Lots of manufacturers have been giving their sedans short deck lids in an attempt to make them look more sporty. Honda's attempt failed. Combined with the large C pillar and odd-looking bevel at the end of the trunk, what Honda got was bubble-butt.

The new, longer deck lid is a much better match for the rest of the car. As I wrote over at TOV, the new trunk makes it look like the profile has a whole new line. For my part, I'd hoped for a new grill, but the rest of the front is fine.

Andre - The Civic didn't change. Might have been aftermarket, though I think the Si hatch also has a mesh grill.

andre1969

the stubby decks are merely a result of the way the interior room of cars is packaged nowadays. Nowadays cars tend to have massive greenhouses given the overall length of the car. For example, if you were to measure from the base of the windshield to the base of the backlite on a current Accord, I imagine that dimension would be close to all but the biggest sedans of the 70's. And trunks nowadays tend to be tall inside, but not really very wide or deep like they were back in the day. In the old days, the bulk of your trunk space was actually behind the rear wheels, which would give you an area with great horizontal dimensions, but would be fairly shallow because of the gas tank up underneath. And it was always more shallow up over the rear axle. These days though, with FWD and gas tanks under the back seat and IRS, more of the usable trunk area is actually over the rear axle, between the rear tires, instead of behind them.

The overall result is a car that gets more of its interior room from vertical dimensions, rather than horizontal, and that gives them the stubby look.

varmint

I'm basing my critique on an article where the writer specifically mentioned the use of short deck lids and high belt-lines. He/she did not specify the Accord (I think they used the TL and Altima as examples). But you're right. The design of modern cars makes it possible for them to achieve these short rear-ends. One of my few complaints with the Mazda3 is the fact that packages must be tossed in from the back, rather than lowered down into the trunk.

grbeck

I like the new Accord...as has been noted, the longer decklid gives more "balance" to the design in profile. The shorter taillights also eliminate the current model's "droopy butt" look.

The headlight design doesn't bother me - but then, I didn't object to the Chrysler LeBaron when it debuted, either.

The Accord still has a great deal of front overhang, and I imagine that the 2006 Civic will, too. Supposedly, Honda wants each new model to earn the highest crash ratings possible, and the front overhang helps it to achieve that goal.

ateixeira

The old tail lights just looked like they were upside down. The new ones are much sharper looking.

Pedestrian-friendly front-ends will make long overhangs pretty much industry standard. BMW 3 series is one of a few exceptions.

-juice

varmint

I don't think the front overhang is all that much longer than previous models. It's just that the rear overhang is so short it makes the front look out of proportion.

stickguy

this in the showroom already, or just pics floating around? I have to take our Odyssey in tomorrow for an oil change, and plan to browse a bit while I am there (will check out the new 3 series too since BMW is right next door).

Don't you just love an automall, with all the dealers side by side?

ateixeira

But my wife would kill me. :-)

Actually, though, I prefer auto shows if I'm browsing because there are no salesmen.

We saw early pics of the Accords, it'll be a while before it's in dealers.

-juice

stickguy

was at the dealer today (service cal for the 'ody). Actually, other than the ody, the rest of the line up is starting to look tired. They had a ridgeline, and other than the roomy back seat, it really dows nothing for me. The Accord is old news (does need a facelift), and they need to get the new civic in ASAP.

ateixeira

Did you check out the in -bed trunk? And the double-hinged tail gate?

If you didn't see those things, you didn't really catch the Ridgeline's innovations.

I wasn't impressed by the interior much either. The back middle seat is rock hard.

-juice

explorerx4

the double hinged tailgate is a good idea, but the 'trunk' is a quack. if you carry anything in the bed, you can't open it.

stickguy

Yup, played with the trunk and the tailgate. Nice features, but true about having stuff in the bed making it less useful.

It does have some innovations, and a roomy cab, it's just the whole package (including, or maybe especially, the styling) that turns me off. Just too damn big and bloated, and way overstyled. Something that in the old days Honda would not have done (they jused to be known for clean, almost elegant design, IMO).

Then again, I'm not a truck person much, although I do like older ones (circa '70 chevy and F series), before they became overgrown caricatures. The new F150 is a pig also.

nippononly

I also was over at the Honda dealer today, and was struck by how much it resembled other car dealers now. Which is to say, every vehicle on the lot had a big purple sign on the window or hanging from the inside mirror with the "special deal" for that vehicle, be it a lease or a discount from sticker. Including the whole very proud row of Ridgelines they had right out front.

Used to be Honda dealers were uppity enough to be infuriating to deal with, but I guess they are getting their comeuppance or something...

On a separate note, I had an '05 Civic VP four-door as a rental for a day - an unimpressive little scrap of a car, but I guess for $13K you can't expect too much. It kept up with traffic, had a decent stereo and cold A/C. It also had cheap little manual door locks that weren't aligned with the trim they were installed in, crank windows that needed 40 winds to get to the bottom and felt like they were going to break long before that, and rock hard plastic everywhere that rattled. Not to mention is this the last car on the market to use 14" rims?

HOOO BOY, do we need a new Civic like yesterday.

gee35coupe

We need yesterdays Civic today. With it's soft touch materials and wrap around dash. I loved those.

varmint

You could always get a "job box" instead. Then you can easily get at the stuff in box, but not fit anything in the bed.

anythngbutgm

Proud owner of a like brand new S2k. Just picked it up yesterday! Got 3,000 more for my trade than what I owed so as far as Honda's resale goes, its still rock solid. And the car? WOW. All I can say. 04 leftover with 1100 miles for 27k! WOW.

Spoke with the dealer about the Ridgline. Apparently they are selling pretty well, he sold 2 of them that morning. I guess the buzz is really going around andd emand is picking up. Well, that's all, gotta go for a drive.

- Proud new owner of an 04 Crimson red S2k... Finally.

ateixeira

The spare's in there, too, and that's a bigger problem because I think when it comes to trunk vs. bed it's either-or (either you need weather protection or you don't). But the spare is stuck whenever you have a load.

How have sales been so far?

VP is like Converse Chucks. Just basic shoes. I think most people buy the more equipped LX.

Congrats on the S2000. Good price, too, my friend is selling a used one for about that much, with a bunch more miles.

-juice

varmint

Congrats on the S2K! I'm am deeply jealous. Sadly, it looks like I'm headed for a mommy-mobile sooner than the roadster I've been dreaming of.

Sales of the Ridgeline are not yet meeting the annual forecast of 50K per year. However, the first month of sales was hampered by the fact that the base model was not yet available. All of the first run trucks were loaded (and freakin' expensive). Many dealers are still trying to get ADM for what they have in stock. They wouldn't be able to do that if units were building up on the lots.

With the truck winning two comparisons in the press, I think the buzz will get out. As production increases to meet demand, the ADM will evaporate, and sales volume will pick up.

gee35coupe

On less than 2 or 3 months of sales. I know many dealerships can hardly keep stock on the lot. My wife works next to a Honda dealer and they are leaving as fast as they can get em in.

ateixeira

The local no-haggle dealer (Brown's) is knocking about $500 most of the Ridges in stock, I think the markups are a bit superficial:

http://arlhonda.brownscar.com/New-Inventory.aspx

Markups like that do scare away customers, though. Thing is you can't control the dealers, they are indy owned and operated.

-juice

varmint

Award winning cars, trucks, motorcycles, power equipment, and now... advertising. :confuse:

I just wish this stuff made it to the USA. The same team who developed "Cog" for the UK Accord is back. "Cog" was the ad that used auto parts in a creative display like dominoes. The new ad is named "Grr" and focuses on Honda's green diesel technology. It won top honors as well as several other awards for advertising at a Cannes Film competition. Here's the full article with a link to the ad itself.

http://www.adage.com/news.cms?newsId=45393

chuck1

Apparently, they are not selling like originally anticipated. (At least in Southern California!) All dealers have plenty in stock. I have heard you can do an "slightly over invoice" deal on them since the supply seems to be plentiful.

grbeck

Spy photos of the new Civic are now out on the web. The coupe, as expected, hews faithfully to the Civic Si show car. The sedan has a Volvo V40 flavor to it (which I don't view as a bad thing). Unfortunately, the shots of the front aren't clear.

Overall, the sedan, in particular, has a more "substantial" appearance. I'm anxious to see the final product.

As for the Ridgeline - are ANY midsize pickup trucks selling well? I seem to recall reading that the Toyota Tacoma, Dodge Dakota and Nissan Frontier are all DOWN despite major redesigns. The Chevrolet Colorado didn't really pick up over the old S-10 until GM began heaping on the incentives.