Is Honda Losing Its Way?

Honda Accord CrosstourIt’s always interesting to read Michelle Krebs, who knows more about the auto biz than most of her peers. Her piece today on the problems at Honda elaborated on the fact that the company is drifting (to put it nicely) on several fronts.

This won’t be news to you car gurus who follow such things, but for a company that’s been on top so long to be sagging in product development, engineering, marketing, and sales—while losing market share to Ford, Hyundai, and Kia—signifies big trouble.

Yesterday Moody’s announced that it will not upgrade credit ratings for Toyota, Nissan, or Honda. “Honda needs an operating margin of 7% before Moody’s will consider raising its A1 rating [Toyota’s is Aa2, highest among carmakers], while a margin of less than 5% may trigger a downgrade.”

I think the firm’s basic conservatism has gotten the better of it.

Comparing Toyota Prius and Honda Insight sales

Sales: Honda Insight versus Toyota Prius

Instead of making smaller, more efficient engines (with direct injection, for example), Honda makes bigger ones—and bigger cars like the Accord to boot. Instead of going for EVs and electric hybrid technology, it lost out big time to the Prius. Instead of producing cars that people want to drive, it gave us the Ridgeline, the Insight, and now the CR-Z, all underpowered and uninspired.

Earlier this year, more than 952,000 Honda vehicles were recalled for serious airbag problems.

The Odyssey is getting long in the tooth, as are the CR-V and Pilot. The launch of the new Civic was just put on hold and won’t happen until spring 2012; spy photos reveal nothing radical in the way of redesign.

About the grotesque Acura design miscues and the hideous Crosstour (at the top of this story), the less said the better.

American Honda sales chief John Mendel blew a lot of smoke to Automotive News and said he isn’t worried about the significant drop in overall market share for the first third of this year. He ought to be. Incentives helped for a while, but Honda, which doesn’t do fleet sales, clearly has to find a different path.

Complacency won’t cut it any more—not in marketing, product development, or engineering.

Where do you think Honda is going? Will it – can it – recover its quality-car, fun-to-drive image?

—jgoods

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  1. | #1

    I’ve got no idea where Honda is going, but the company that now makes a pumped-up V6 coupe Accord and has a division (Acura) that makes a few $50+K vehicles and competes with BMW has come a long way from the company that entered the American market in the mid-’70s with the tiny, fuel-efficient, no-luxury-options Civic. Seems like now might be a smart time to get back to some of Honda’s original goals.

  2. | #2

    Honda have become so very ugly they are completely off my list of future purchases- the Crosstour ?? Who wants to be seen in a car that has a horse face front end and profile of a 80 Chevy Citation hatchback? it really doesnt matter how good your car is if people point and snicker as you pass—–

  3. Wynn Collins
    | #3

    The product lines Honda/Acura looks as though they are being clad in ridiculous amounts of trim that keep getting bigger and bigger.The Cross Tour,you mean Chrysler Pacifica…If Hyundai can make noise with the Genesis.For pete sake get a new Prelude out there guys!

  4. randy
    | #4

    I crack up when I read this stuff. People complain about companies like GM and Ford(which have been around 100 years) and then are surprised as the much younger Japanese brands start to get stale, shortcut quality and go all conservative. It’s the nature of the beast, folks. I’m just darn glad to see human nature wipe those self-righteous smirks off their Nipponese kissers.

  5. Jason R
    | #5

    When I turned 16 back in 1989, I had already owned my first car for one year. It was an ’85 Honda CRX Si that had been my older sister’s first car and my parents were smart enough to keep it for me until I got my license. I adored that little roller skate of a car, but a jerk in a Ford pickup sent it to an early grave a few months after I turned 16….

    For the next 17 years (until 12/05), when I traded cars it was only a question of which Honda (or Acura) to get next…I never even considered anything else.

    Then I had an accident a week before Christmas 2005 and totalled my ’02 Accord EX and suddenly needed a new car! I went to the Honda dealer and immediately hated the 2006 Civic (looks like a suppository mated with a spaceship). The 2006 Accord was nice, but the model and color combo I wanted couldn’t be found anywhere in the Southeast (EX 4-door, 5MT, Carbon Bronze w/ Black cloth). I entertained the thought of an Element until I drove one…’nuff said. I test drove an Acura TSX and fell in love with it, but $28k was way over my budget…

    The Mazda3 was the darling of the automotive media at the time, so I decided to check it out. In less than an hour, I knew it would be my next car (and my first non-Honda)….and I still love it after almost five years.

    The situation at Honda is a lot worse now with the bloated 2008 Accord redesign and the same Civic that I hated in 2006. The Fit is semi-interesting, but too small and underpowered for my tastes. The Accord Crosstour, Insight and CR-Z are painful to look at, much less drive. And the CR-V and Element are quickly becoming old and outdated. Then there’s Acura and, for the first time, I’m at a loss for words (due to nausea)!

    WTF happened to the Honda that I knew and loved for so long? I still own the ’92 Accord EX that my grandparents’ bought me for high school graduation (18 yrs old, 342k miles, original engine/tranny). It’s still a great car, fun to drive, low cowl and lots of glass, ergonomically perfect interior)…Soichiro must be turning over in his grave!

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