Honda is Slipping Into Reverse

Given the troubles of archrival Toyota, Honda should be cleaning up this year, msnbc reported. It isn't working out that way. After a decade of nonstop growth in the U.S., Honda Motor fell from a 10.5 percent share in the first quarter of 2009 to 10.1 percent in the same period this year. (Rival Nissan Motor now has 9 percent, up from 7.9 percent, and Hyundai Motor is up to 4.4 percent, from 4.2 percent.) Honda "has lost its mojo with new model launches," says Jessica Caldwell, a senior analyst at car shopping site Edmunds.com.

While Honda's sales are up 12.5 percent from last year's dismal first quarter, the overall market grew by 17.1 percent. The company once offered a sportier alternative to stodgy-but-reliable Toyota Motor, but Honda's cars now look pale alongside newer models from Nissan, Hyundai, Ford, and General Motors, says John Wolkonowicz, an analyst at IHS Global Insight. With its reputation for performance and handling, Honda "used to be the Japanese BMW," Wolkonowicz says. "It's not anymore."

Honda declined to make any executives available for this story. A spokesman says the company isn't concerned about market share; it is profitable and remains focused on providing reliable, safe, efficient cars. Nonetheless, Honda in March offered cheap leases to battle 0 percent financing deals from Toyota as that company sought to shore up sales in the wake of its recall problems. Honda's program boosted interest somewhat, but the market-share slide continued.

The new Accord Crosstour is emblematic of Honda's woes. Honda launched the model in November, billing it as a mash-up of an SUV and a sedan. Trouble is, the Crosstour has neither the room of most SUVs nor the look and feel of a sedan, says James N. Hall, principal of 2953 Analytics, an auto consultancy in Birmingham, Mich. And the Crosstour only comes with a V-6 engine, pushing the price to $30,000. Not only is it about $3,000 more than Toyota's competing Venza but it also uses more fuel. This year the Venza has outsold the Crosstour by nearly 2 to 1.

Honda has similarly stumbled with the Insight. During the hybrid's splashy relaunch last year, Honda pitched it as a less expensive alternative to Toyota's Prius. In 2010, Honda has moved fewer than 5,000 Insights in the U.S., about one-sixth the number of Priuses Toyota has sold. And in March, Ford's Fusion hybrid edged out the Insight 1,670 to 1,652 even though the Fusion costs some 35 percent more. While the Fusion is roomier, it gets nearly the same gas mileage, about 40 miles per gallon.

Even Honda's core models are under pressure. The Civic compact, the No. 6 seller in the U.S. in 2009, is No. 7 this year, researcher Autodata reports, and sales of the CR-V are off by 4.2 percent. And while Accord sales are growing, Honda opted for more conservative styling when it relaunched the sedan last year. Now potential buyers are exploring other options; a year ago, only 5 percent of visitors to Edmunds.com interested in the Accord also checked out the Hyundai Sonata, and 6 percent looked at Ford's Fusion. This March, 12 percent of Accord shoppers considered the Sonata and 9 percent gave the Fusion a look.

One such shopper is Charles Summers, who works for a human resources firm near Atlanta. With his first child on the way, Summers figured he would trade his 2007 Hyundai Elantra for an Accord. But he found the styling bland and felt the Sonata was more comfortable. So he spent $26,000 for a Sonata, while a similarly equipped Accord would have cost more than $28,000. "I thought for sure I'd end up with an Accord," Summers says. And that's how market share slips away.