Is Honda Losing Its Way?
It’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.
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?