Honda Bets Its Future on Fifth-Generation Accord
Slump in sales also has troubled company eyeing truck market
CALL it ``The World According to Honda.''
Few cars can claim the success of the Honda Accord. From 1989 through 1991, the flagship sedan was America's best-selling car. But in a bitter battle, Ford Motor Company's Taurus grabbed the top spot last year. Now, with an all-new Accord coming to market, Honda hopes to regain lost momentum.
But the Accord alone may not be enough to revive Honda's fortunes. So the Japanese automaker is looking for ways to win back buyers who are trading in their cars for light trucks.
The battle between the Accord and Taurus was one of the costliest in automotive history. Ford spent an estimated $200 million on subsidized leases and rebates and ended the year by selling 409,751 Tauruses, compared with 393,477 Accords.
Ford won more than just bragging rights. Taurus has maintained its momentum, with sales holding near-record levels this year. The Accord, on the other hand, has barely held its place in the Top 10. It has been passed by the Toyota Camry and even, during some months, by the decade-old Chevrolet Cavalier.
``The letdown was bigger than we anticipated,'' concedes American Honda Motor Company Senior Vice President Dick Colliver. ``I don't think anyone anticipated the reaction on the dealer side or the level of consumer interest.''
It is not surprising, then, that Honda officials are calling the fifth-generation Accord the company's most important line ever.
Since the Accord debuted 18 years ago, more than 7.2 million have been sold worldwide, 4.3 million of them in the United States. The US market is Honda's largest, accounting for sales of 768,845 vehicles last year, compared with 615,737 in Japan.
So the new Accord was designed primarily for American buyers. Though a fraction of an inch shorter than the old car, it is almost three inches wider.
Perhaps its most appealing feature, though, will be its price. Traditionally, each new version of the Accord has been bigger and more expensive. The weakened dollar has made it even more difficult for Honda - and other Asian automakers - to hold the line on prices, and that is one reason why the Japanese share of the US market has plunged four percentage points in the last year.
At a press preview of the new Accord, Honda stunned observers by introducing the 1994 DX model at $14,330. That is the same price as last year's base vehicle, even though the new car also gets costly driver and passenger-side airbags. The upscale LX and EX models will increase $300 and $400, respectively, and overall American Honda prices will rise just 2.6 percent at the launch of the 1994 model-year.
``It's going to come across like a heck of a buy,'' says auto analyst Chris Cedergren, of the AutoPacific Group. ``We think it will help Honda make a nice recovery in 1994.''
Volume during the rest of 1993 will be limited as Honda slowly increases production at the Marysville, Ohio, plant that now produces 76 percent of the Accords sold in America.
But not every analyst believes the new vehicle will meet its mark in 1994. One potential problem: Honda decided to delay until 1995 a long-awaited V6 engine.
A sales executive, Takeo Okusa says: ``Maybe 20 percent to 25 percent of our potential customers would like a V6.''
There is at least one other version of the Accord under development. Honda's first minivan will make it to market sometime in the 1995 model-year. Company officials will not divulge many details, but sources suggest it will blend the styling and features of conventional minivans and station wagons. The minivan will initially be built in Japan, though production will be transferred to the US several years later.
The minivan will be Honda's second foray into the light truck market. In January, the automaker will introduce a Honda version of the Isuzu Rodeo - Honda wags call it the ``Hodeo.'' Honda designers are also developing their own sport-utility vehicle.
The carmaker's dealers say they could not have waited much longer. Millions of American motorists have been trading in their sedans, wagons, and coupes for minivans, pickups, and sport-utility vehicles. In fact, the light truck segment now accounts for about 40 percent of the overall US motor vehicle market, a share that has doubled in a decade.
Honda's Mr. Colliver suggests a ``reasonable'' goal would be to eventually sell 100,000 to 150,000 light trucks a year. Next year alone, Honda hopes to sell around 40,000 sport-utility vehicles, and that, company officials say, should boost overall sales to around 700,000 units. That would still be short of the record 716,495 Hondas sold in 1990. But it would also be an improvement from 1992, when battered by the battle with Taurus, Honda sales plunged to 648,745.