Honda’s deliberate path drives sales growth

Roland Jones Business news editor • Profile • E-mail

Introducing a sleeker and more futuristic-looking prototype of its Pilot sport utility vehicle at this year’s Detroit auto show, Japanese automaker Honda sounded a note of optimism about the year ahead.

John Mendel, American Honda Motor’s executive vice president, told reporters he expects Honda to notch U.S. sales of 1.4 million vehicles this year, up slightly from 2007 and marking a 15th consecutive year of higher sales.

The forecast came amid whispers of an impending U.S. recession and continued difficulties in the U.S. housing market, and even as other top executives at this week’s media preview said they expect a challenging automobile market in 2008.

Even modest sales growth in a year that’s expected to see total U.S. vehicle sales decline 3 percent — the worst since 1998 — is commendable, but if there’s one international automaker that can afford to show a little hubris, it’s Honda.

The automaker could be called ascendant, boasting the most fuel-efficient fleet on U.S. roads and earning top marks in reliability studies, while its Accord sedan is the nation’s fifth-most sold vehicle, not far behind Toyota’s Camry and Corolla.

The key to Honda’s success is an abundance of caution, said Aaron Bragman, an automotive industry analyst at Global Insight.

“They move slowly with design, development and product growth,” he said. “They are very measured and they don’t take risks, and that is why you don’t see them having the same kinds of problems that Toyota is having with its expansion.”

It’s easy to compare Honda with Toyota, its Japanese rival that for years has enjoyed a reputation as the top manufacturer of reliable and fuel-efficient vehicles.

Toyota and Honda both started selling cars in the United States in the late 1950s, but Honda has often been overshadowed by Toyota.

But cracks have started to appear in Toyota’s armor even as it poised to overtake General Motors to become the world’s No. 1 vehicle producer. It has seen its reputation eroded by product recalls and slippage in consumer-quality surveys. Adding to Toyota’s woes are problems with its Tundra pickup — its first foray into the profitable U.S. truck market.

“There’s a perception-vs.-reality thing going on here,” said Karl Brauer, editor in chief at automotive research site Edmunds.com.

“Toyota has got a lot of mileage both figuratively and literally out of their Prius, and they’ve crafted a green image for themselves, but anyone who really understood the situation knew that the number of V8 engines Toyota was selling was vastly greater than the number of big-engined cars that Honda was selling,” he said.

“I have studied Toyota’s interiors in depth for some time and seen a slip in material quality,” Brauer continued. “The types of interior plastics they are using now in the Toyota Camry sedan gets scratched more easily, but I don’t think Honda has had that kind of slippage — their interiors are as good as they ever have been, and the recall and quality rankings have been as strong as ever.”

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