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Honda Bets Buyers Will Pay Mileage Premium for Hybrid Accord (2)

June 20, 2013

Honda Bets Buyers Will Pay Mileage Premium for Hybrid Accord

Takanobu Ito, president and chief executive officer of Honda Motor Co., poses with the company's Accord hybrid sedan at its unveiling in Tokyo. Photographer: Kiyoshi Ota/Bloomberg

Honda Motor Co. (7267), Japan’s third-largest carmaker, unveiled a hybrid sedan at a 20 percent higher price than Toyota Motor Corp. (7203)’s gasoline-electric Camry, betting drivers will pay extra for fuel economy.

The hybrid Accord sales begin tomorrow in Japan at a 3.65 million yen ($38,000) starting price, Tokyo-based Honda said today in a statement. That’s 610,000 yen more than the 3.04 million yen dual-powered Camry. The hybrid Accord starts U.S. sales in October, according to a separate statement today.

Honda’s flagship sedan, outsold by the Camry in the U.S. every year since 2002, seeks to build on the success it has had this year by improving gas mileage. U.S. deliveries of the Accord have jumped 23 percent this year, compared with a 5.5 percent drop for the Camry.

“It’s definitely a good strategy, with consumers looking for the best possible fuel economy that meets size, room,” requirements, said Alec Gutierrez, senior market analyst for auto researcher Kelley Blue Book in Irvine, California. “The Accord is doing phenomenally well, and with the addition of the hybrid, Honda will see a nice boost.”

Camry has led annual sales versus the Accord in the U.S. for 11 years, a gap that narrowed to 22 percent last year from 31 percent in 2011.

Honda is counting on the hybrid Accord’s engine to lure buyers away from rival sedans, Takanobu Ito, Honda’s president, told reporters today in Tokyo.

“The new engines will be a great advantage for us,” he said.

The Hybrid Accord has a fuel-efficiency rating of 30 kilometers a liter under Japan’s JC08 testing standards, according to Honda. Toyota says the Camry hybrid travels 23.4 kilometers per liter.

Green Drivers

“We hope to gain buyers who have a stronger environmental awareness,” Tetsuya Nomura, chief engineer of the model, said last month. “Our fuel-efficiency technology is much better than our competitors.”

Honda fell 1.5 percent to 3,510 yen at the close of Tokyo trading, paring its gain this year to 12 percent, compared with a 25 percent surge for the benchmark Nikkei 225 Stock Average.

The carmaker can demand a premium for the Accord hybrid because it is at the top of the carmaker’s line, said Takeshi Miyao, a Tokyo-based industry analyst at Carnorama Japan. Instead of only comparing the car against Toyota’s Camry, consumers may also compare it with the Lexus, he said.

The Lexus IS hybrid starts at 4.8 million yen in Japan, according to the carmaker’s website.

“The Accord is Honda’s high-end, flagship model,” Miyao said. “So if consumers compare it against the Lexus IS Hybrid, they may view it as a good, reasonably priced car.”

Honda will assemble the U.S. version of its hybrid Accord in Marysville, Ohio, according to a statement from the company. The model is expected to get a fuel economy rating of 49 miles (78.9 kilometers) per gallon, it said.

To contact the reporters on this story: Anna Mukai in Tokyo at amukai1@bloomberg.net; Masatsugu Horie in Osaka at mhorie3@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net


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