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News - Market Insight - Market Insight 2014

The only way is up for Honda

Stiff competition: Sales of Honda's Thai-built Accord sedan are down so far this year, with the company's local chief blaming tough competition in the mid-size segment.

Honda Australia revises sales targets after 33 per cent drop in year-to-date sales

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14 May 2014

HONDA Australia is expecting its sales to rebound in the second half of 2014 after a disastrous start to the year that has seen sales plummet following stock issues and currency fluctuations as well as strong competition from its rivals.

The Japanese car-maker's local arm has also revised its initial sales predictions for 2014 down by five per cent from 40,000 to 38,000 passenger cars and SUVs.

Honda said that it expects to sell an average of 2600 cars per month in the first half of the year, but in the second half it predicts that will rise to 3600 units each month to the end of December.

In the four months to the end of April this year, Honda has sold 9789 passenger cars and SUVs which marks a substantial decrease of 33.6 per cent compared to the same period in 2013 when it shifted 14,743 units.

Speaking at this week's City light-car launch, Honda Australia director Stephen Collins said the company predicted in January that it would not match the sales targets of the first half of 2013, but that it was still targeting annual sales of 60,000 units in the coming years.

“Our objective is we need to get back 60,000 units as quickly as we can but we need to do it sustainably,” he said.

“And we need to do it through shoring up our existing product but also new products in new segments and the HR-V (forthcoming small SUV due in January next year) will give us incremental business so we are not looking to wind back, we are looking to grow.”

Mr Collins said he hoped the company would achieve its sales goals within three years.

The last time it shifted that many units was in 2007 when it reached 60,529 sales. The numbers have been sliding every year since, with 2011 marking its worst result in years with 30,107 sales, due in part to the floods that devastated parts of Thailand, which heavily impacted production.

Honda rebounded slightly last year with sales of 39,258 units up 9.6 per cent over 2012's haul of 35,812, but this year's sales results are due to a number of poor performers in its stable.

One of the biggest losers in Honda's line-up this year is the Civic small car range which has sold 3045 units to the end of April, marking a 42.4 per cent drop over the same period last year.

During that period in 2013, the Civic was outselling rivals as diverse as the Volkswagen Golf, Nissan Pulsar and Mitsubishi Lancer and was chasing the Ford Focus, but this year is trailing all aforementioned models but the Lancer.

Mr Collins said that there were a number of reasons for the decline in Civic sales, with the hatch that is sourced from the United Kingdom proving to be the problem child in the range.

“Civic, particularly the hatch, has been a bit of a challenge for us. We have been relatively short on stock but in addition to that, the British pound has appreciated about 20 per cent versus the Australian dollar so that has put pressure on that car.

“But of course the UK factory is the only factory we can source it from. So we are still 100 per cent committed to the car but that's made it difficult for this year.” With the release of the City this month, Mr Collins said the new-gen light car will drive interest in the brand and hopefully into dealerships.

“I think that we are still confident that we have got Civic positioned reasonably well. Year-on-year I think that we need to do better in the second half. I think City will help, and will drive more inquiry to the dealerships. I think some buyers may walk out having purchased a Civic instead of a City.”

The other model faring poorly in the line-up is the mid-size Accord that went on sale locally 12 months ago, with sales down 40 per cent from 1059 units to the end of April last year to 616 sales so far this year.

Mr Collins said he was not concerned about the drop off in Accord sales and acknowledged the strong competition in the segment, but said some model-year upgrades to the range should prompt a boost in interest.

“We are working on some upgrades to Accord. Accord I would say is one of our best known name-plates. I think we can do better and I think we should be doing better. My challenge to our team is we need to improve Accord's market share and as we move into the second half I think we can do that.” Mr Collins said the company has no plans to drop the price of the CR-Z hybrid sports-car, despite consistently low sales and increased competition from cheaper rivals such as the Hyundai Veloster and Toyota 86.

“It is clearly a niche model for us but we think it still plays a role. We are still committed to hybrids globally and locally so I think it has a role. But it is relatively small volume and in the foreseeable future it will probably stay relatively small but we are still committed to it.”

It is not all doom and gloom for Honda however, with its recently-launched fifth-generation Odyssey people-mover proving to be a popular choice in the resurgent segment, with sales up 152 per cent to 801 units for the year so far.

Run-out deals on the outgoing City have also increased interest in the Thai-built run-about, with a 32.7 per cent boost in sales so far this year.

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