Honda's big hopes for a new Civics generation

GREG KEENAN — AUTO INDUSTRY REPORTER
MARKHAM, ONT.— From Tuesday's Globe and Mail
Published Monday, Feb. 14, 2011 7:49PM EST
Last updated Tuesday, Feb. 15, 2011 8:55AM EST

If Honda Canada Inc. (HMC-N43.950.150.34%) president Masahiro Takedagawa is worried about the Civic plunging out of first place in compact car sales last month, he’s not showing it.

Sales of Honda’s most important vehicle stumbled badly last month, dropping 51 per cent compared to the previous January. They sat behind sales of five other compact cars: the Hyundai Elantra, Toyota Corolla, Mazda3, Chevrolet Cruze and Ford Focus.

“January was a bit unlucky,” Mr. Takedagawa said in an interview, attributing some of the drop to snowstorms wreaking havoc on sales.

“We do also have the snow blower,” he joked. “That helps a lot.”

Honda’s snow blower is not, however, the Civic, which has been the best-selling passenger car in Canada for the past 13 years and the product that has come to define the company in this country.

While the results show just a single month of sales, the presence of cars from two of the Detroit Three auto makers ahead of the Civic is almost unheard of in the compact segment, which represents the biggest chunk of the Canadian market.

The January results underline how the competitive landscape in Canada has become tougher for Honda – and other Japan-based auto makers that have relied on compact cars – amid the rise of Hyundai, the new emphasis Ford is putting on passenger cars and GM’s rebound from Chapter 11 bankruptcy protection.

They also come after a year that saw Honda underperform in the Canadian market. Its sales rose 1 per cent versus a 7-per-cent advance for the market as a whole, at a time when Honda was expected to benefit from the recall crisis that afflicted its arch-rival Toyota Canada Inc.
Mr. Takedagawa and other senior executives are fully aware of the competition.

“Each of our brands, while being well regarded in the Canadian marketplace, is facing significant, unique challenges which must be overcome,” Jerry Chenkin, Honda Canada’s executive vice-president, said last month in a memo to dealers of the company’s Acura luxury brand. “We must develop a more robust marketing effort to ensure that our brand messages resonate with Canadians.”

As Mr. Takedagawa put it: “Marketing, advertising, incentives, discounts; it becomes war, particularly in the compact segment.”

Honda’s immediate response to the disappointing January results was to boost advertising and slap a low interest rate incentive of 0.9-per-cent financing for up to 60 months on the Civic and the second-best seller in Honda’s lineup, the CR-V crossover utility vehicle.

A longer-term solution will arrive in April – in the form of the ninth generation of the car that launched the company’s sales in Canada in 1973.

Honda has shown only concept versions of the car so far and will do so again on Thursday at the opening of the Canadian International Auto Show in Toronto.

Mr. Takedagawa offered one detail: The wheelbase on the 2012 Civic has been shortened by 30 millimetres, providing a sportier ride.

There will be other innovations and upgrades, particularly to electronics components, he added.

“We [will] try to minimize the price increase, but enrich content,” he said in the company’s sparkling new head office in Markham, Ont., north of Toronto. “We don’t believe this is the situation to increase dramatically the price.”

He’s relying on a 22-per-cent jump in Civic sales – to 70,000 this year from 57,501 last year – to propel an overall gain in Honda’s sales to 150,000 from 141,070 in 2010.

But industry sources say the new Civic will have to be dramatically better than the Elantra, Focus, Cruze and others in the segment to generate those kinds of sales numbers.

Mr. Takedagawa also pointed to the redesigned Odyssey minivan that was introduced late last year and a new CR-V coming at the end of 2011 as other vehicles that will help boost sales.

“Everybody has a lot of new product,” said Dennis DesRosiers, president of DesRosiers Automotive Consultants Inc. in Richmond Hill, Ont. “How do you distinguish yourself?”

As for last year, Mr. Takedagawa and Mr. Chenkin point to a shift in the market to pickup trucks and sport utility vehicles as one reason for Honda’s underperformance. That shift appears to have been driven in part by Canadians’ comfort with gas prices above $1 a litre.

“We saw some crazy advertising where a manufacturer is offering a $14,000 rebate on a pickup,” Mr. Chenkin said. “You can buy a lot of gas for $14,000.”

The CR-V and other crossovers performed well in the market shift, but Honda’s Ridgeline, a combination of pickup and SUV, doesn’t compete directly with the Ford F-series, Chevrolet Silverado and Dodge Ram pickups, all of which experienced double-digit sales gains last year.

Mr. Takedagawa said he spent much of last year focusing on reducing a vast oversupply of vehicles at the company’s dealers in Canada, reducing the days supply of vehicles – a key measure in the auto industry – to a healthy 56, from more than 100 last March.

Honda has also restructured its marketing and sales initiatives in Canada so that there are now three distinct brands representing Honda, Acura and the motorcycle and power business.

In addition, about 50 salaried employees and executives have opted for early retirement after the company offered such incentives for the first time in its history in Canada.
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THE NINE LIVES OF THE HONDA CIVIC
1972
First generation
The car that started the Honda ride in Canada in 1973 offered great fuel economy at a time of soaring gas prices, based on its four-cylinder engine, light weight and front-wheel drive.
Canadian sales, 1972: 747
––––
1979
Second generation
The 1979 redesign included a new version of the fuel-efficient CVCC engine, plus four-door sedan and station wagon versions of the subcompact.
Canadian sales, ’79: 19,880
––––
1983
Third generation
The boxy 1983 Civic had more interior space and came in three-door, four-door and five-door versions.
Canadian sales, ‘83: 18,903
––––
1987
Fourth generation
By 1987, Honda was offering five different engines and a double-wishbone suspension. The auto maker began assembling the car in Alliston, Ont., that year and added a second shift of workers in 1988.
Canadian sales, ‘87: 25,831
––––
1991
Fifth generation
Styling changed dramatically in 1991. A new VTEC engine replaced the CVCC, including a 170-horsepower version.
Canadian sales, ‘91: 50,320
––––
1995
Sixth generation
The sixth generation, available beginning in 1995, offered evolutionary changes in styling and included the option of a variable speed automatic transmission.
Canadian sales, ‘95: 33,386
––––
2000
Seventh generation
The Civic continued to get bigger with a 2000 redesign. By now, it was competing in the compact segment in North America.
Canadian sales, 2000: 60,407
––––
2006
Eighth generation
By 2006, Civic is much more global, tailored to different tastes in different markets and being produced at a Honda plant in China for the first time.
Canadian sales, ‘08: 72,463, an annual Canadian sales record.
––––
2012
Ninth generation
The 2012 version will start rolling off assembly lines in Alliston and Greensburg, Ind., in April. There are 930,000 Civics still on the road in Canada, representing about 4 per cent of the existing Canadian fleet of 22.3 million vehicles. Cumulative Canadian sales total 1,569,465 since 1973.
Greg Keenan

Source;
http://www.theglobeandmail.com/globe-investor/hondas-big-hopes-for-a-new-civics-generation/article1907083/page2/

HONDA CIVIC STAYS ON TOP AS CANADA'S TOP-SELLING CAR (13th yr in a row!)

TORONTO, Jan. 5 /CNW/ - With sales of 57,501 units in 2010, Honda Civic retained its position as Canada's top-selling passenger car for the 13th consecutive year. Since 1973, nearly 1.6 million Honda Civics have been sold in Canada, making Civic a leader in the Canadian automotive landscape. An all-new, 9th-generation, 2012-model Civic will go on sale this spring.

"We thank the thousands of Canadians who bought Honda Civic models this past year to make it Canada's number one car for the 13th year in a row," said Jerry Chenkin, executive vice president of Honda Canada Inc. "We appreciate and value these new car buyers' vote of confidence in Civic with its strong resale value, excellent fuel efficiency, top-of-class safety features and fun-to-drive character."

"With the exception of the Civic Hybrid, all Civic models sold in Canada are made here in Canada. We are proud of our investment in Canada as a leading vehicle manufacturer. In fact, nearly half of all the vehicles we sold in Canada in 2010 were built in Canada, including the Honda Civic and Acura MDX, ZDX and the Canadian-exclusive CSX."

Of the more than 5.3 million Honda and Acura vehicles that the Honda of Canada Mfg. assembly plants in Alliston, Ontario, have produced over the past 24 years, more than 3 million of those have been Honda Civic models.

Now in its 41st year of operation in Canada, Honda Canada builds the Honda Civic and Acura MDX, ZDX and CSX at its two plants in Alliston, Ontario, and produces fuel-efficient 4-cylinder engines for Civic production at its adjacent engine plant.

Source;
http://www.newswire.ca/en/releases/archive/January2011/05/c8692.html