http://www.businessweek.com/news/2012-09-05/honda-s-revamped-accord-arrives-in-boost-to-u-dot-s-dot-sales-recovery

Bloomberg News

Honda’s New Accord Brings a Boost to U.S. Sales Rebound

September 05, 2012

Honda's Executive VP of U.S. Sales John Mendel

John Mendel, executive vice president of Honda Motor Co.'s American unit. Photographer: Scott Eells/Bloomberg

Honda Motor Co.’s 2013 Accord, the revamped version of the longest-selling U.S. midsize car, debuts this month as the company seeks to speed its sales recovery and recapture a reputation for benchmark vehicles.

“We think we’ve hit this one out of the park,” said John Mendel, executive vice president of U.S. sales, in an interview last month in Santa Barbara, California. “This is the decathlon champ of this category.”

The ninth generation of the car sold in the U.S. since 1976 has a new 2.4-liter direct-injection engine and a continuously variable transmission, a first for the Accord. Honda also says the car has more “sculpted” exterior styling, improved safety and fuel economy, faster acceleration and a quieter ride.

The Accord, built in Ohio since 1982, faces competition that may be the fiercest in the model’s history. The segment it once led with Toyota Motor Corp. (7203)’s Camry is expanding on rising sales of sedans from Nissan Motor Co., General Motors Co. (GM:US), Hyundai Motor Co. (005380) and Volkswagen AG. (VOW) Ford Motor Co. (F:US) also expects high demand for a revamped Fusion sedan arriving this month.

That competition has cut into Accord’s share of U.S. midsize-car sales, according to Edmunds.com, an industry pricing and data company in Santa Monica, California. Accord accounted for about 11 percent of those sales in the past two years, falling from 17 percent in 2008, Edmunds said.

This year through August, Camry was the segment’s top seller, with 280,536 deliveries, up 37 percent from a year earlier. Accord followed with 218,665, a 35 percent gain, with Altima sales at 209,592, a 19 percent increase.

‘Pivotal Model’

“The new Accord is a pivotal model for Honda since it not only comprises 25 percent of the brand’s sales, but it also completes the redesign cycle for its trio of core models,” said Jessica Caldwell, an analyst at Edmunds.

Those other two models are the Civic compact car, redesigned in early 2011, and the CR-V small sport-utility vehicle, revamped late last year. Each is the U.S. volume leader in its segment this year. Civic sales rose 38 percent to 212,483 through August, even after Consumer Reports magazine gave it an unfavorable review, and CR-V’s gained 35 percent to 191,113, the most of any SUV in the U.S.

“This Accord launch is an important one for us, probably the single-most in our history,” Mendel, who is based at Honda’s U.S. sales headquarters in Torrance California, told reporters last month. “It serves as a bellwether for our brand and is a contributor not only to our U.S. but our global success.”

Honda’s American depositary receipts (HMC:US) fell 0.5 percent to $31.46 yesterday in New York. They are up 3 percent this year.

Six Versions

The 2013 Accord is available in six model grades, including a new Sport version to appeal to younger drivers. Both a plug-in and conventional hybrid version of the car will arrive next year, the Tokyo-based company said.

Fuel economy with the new four-cylinder engine improves to 27 miles (43 kilometers) per gallon in city driving, 36 mpg on the highway and 30 mpg combined, a 7 percent increase. Among competing cars, only Nissan’s 2013 Altima is better, with 31 mpg in combined fuel economy, boosted by a 38 mpg highway rating.

“That’s certainly an advantage Nissan can talk about,” said Alec Gutierrez, an industry analyst for Kelley Blue Book in Irvine, California. “I could see that influencing a minimal amount of sales, since it’s not that extreme a difference.”

The Accord’s 103.2 cubic feet (2.9 cubic meters) of passenger space trails only Hyundai’s Sonata, at 104 cubic feet.

Standard equipment on all 2013 Accords includes hands-free Bluetooth phone and audio, USB/iPod integration, a rearview backup camera and an Eco Assist system to coach drivers to improve fuel economy.

Blind-Spot Warning

EX grade and higher Accords get Honda’s new LaneWatch blind-spot warning system. A rear-facing camera on the right outside mirror sends images to a dashboard screen when drivers change lanes or turn right, making it easier to see if another vehicle is in the blind spot. Other safety features available include lane-departure and collision-warning systems. EX is one step above LX, Honda’s lowest grade.

Pricing will be announced later and will be in line with the current models, the company said.

A $64 million stamping press installed last year at Honda’s Marysville, Ohio, plant can shape steel body panels for the revamped Accord with deeper contours and more detail, said Ron Lietzke, a company spokesman. The 2,300-ton “servo” press is Honda’s most advanced, stamping with more precision and speed, he said.

The result is body panels with creases similar to those of Daimler AG (DAI)’s Mercedes-Benz E-Class luxury sedans.

Styling Difference

“It’s not so dramatic a difference but in terms of styling the new car is enough of a departure for people to see it’s really something new,” Gutierrez said. “They tried to differentiate a bit more than Toyota did with Camry last year.”

Bill Fay, Toyota’s group vice president of U.S. sales, said the new Accord, as well as the revamped Nissan and Ford midsize cars, should ultimately benefit the Camry.

“We look at it as very positive,” Fay said on a conference call Sept. 4. “It brings more attention to the segment, and when that happens Camry usually does very, very well. We get shopped more often.”

Honda’s goal is U.S. annual sales of at least 350,000 of the new Accords. That would be the car’s highest since 372,789 in 2008.

With the revamped Accord, the company wants to boost U.S. sales of Honda and Acura models about 27 percent this year to at least 1.46 million, Mendel said last month. That would be the company’s best in five years.

Accord buyers’ loyalty is particularly high, rivaling that of the Camry, which should buoy sales of the new model, Gutierrez said.

“Brand loyalty is so high for that car,” he said. “It looks like they’ve done a good enough job to at least keep those buyers.”

To contact the reporter on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net


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