By on August 19, 2014

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In this year’s red hot new car market, the Honda Accord and CR-V have apparently captured the top spot in both new car and SUV retail sales through the first half of 2014, according to Polk registration data. But John Mendel, Honda’s head of sales, had some pointed words for the industry as a whole, and the state of the American auto market.

Speaking to Automotive News, Mendel said that despite Honda’s slipping market share, Honda wouldn’t do“stupid things in the short-term that damage the person who bought yesterday.”

Criticizing longer loan-terms and looser underwriting standards for new vehicle loans, Mendel said

“It’s a very, very short-term tactic…especially in the subprime area, because you not only are pulling sales forward, you’re probably pulling people out of used cars into a new car that maybe they can’t afford.”

Stating that the new car market was “near the top”, Mendel said that Honda would continue to focus on retail sales, rather than pivot towards more fleet delivers like many of its rivals do. Even so, Honda’s sales are down 1 percent year to date, while incentive spending has increased drastically – as much as 55 percent for its passenger car lineup -, as Honda aims to stay competitive against competitive brands and make new car leases more attractive.

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88 Comments on “Honda’s Sales Chief Warns Of “Stupid Things” As Accord, CR-V Top Retail Sales Charts...”


  • avatar
    CoreyDL

    I wonder when you all will be out of current model pics from Alex’s reviews to use :(

    • 0 avatar
      redliner

      I’m guessing that will be in around 2016, as many models that he reviewed will be resigned or significantly refreshed that year.

      Count me in as one of the people that misses his level headed approach to reviews.

      • 0 avatar

        He’s still making his videos that I enjoy through RSS reader at alexonautos dot com. And his approach is involving towards a broader coverage: these reviews are not mainly about the comfort of a car’s trunk anymore.

    • 0 avatar
      DeadWeight

      Alex’s photos are/were about the only objective part of his reviews.

      Out of approximately every 50 reviews he did, there may have been 1 vehicle that earned a grade of less than a solid B.

      We’re talking As or Bs awarded to vehicles such as the Acura ILX, Acura RLX, Hyundai Veloster, Mitsubishi whatevers, Lexus IS250, etc.

      That’s quite an achievement.

      • 0 avatar
        cargogh

        A very decent achievement indeed.

      • 0 avatar
        koshchei

        I do agree with this — reviewers should adopt and share their evaluation rubric. This will have the benefit of:

        1) Keeping the reviewer objective-ish and accountable to his readers.
        2) Ensuring that the cars being reviewed can be compared with one another by a prospective buyer.
        3) Giving forum commenters one less thing to bitch about ;)

        Question 1 should always be: Is it brown, diesel, $14999 loaded including delivery, equipped with a soft touch supple whale foreskin interior, designed by Audi but build by Chrysler, and a station wagon?

      • 0 avatar
        FreedMike

        “We’re talking As or Bs awarded to vehicles such as the Acura ILX, Acura RLX, Hyundai Veloster, Mitsubishi whatevers, Lexus IS250, etc.”

        I’m assuming you’ve driven all of these in depth, and will now give us your specific reasons for giving these cars less than a “B”.

    • 0 avatar
      billfrombuckhead

      Sour grapes from someone whose job is in jeopardy from lack of results.

  • avatar
    eggsalad

    On the high side, all the repos should drive down used-car pricing!

  • avatar
    Pch101

    Honda continues to have incentives that are well below average. A bit of an increase in incentive spend doesn’t mean much in the scheme of things.

    Honda tends to be conservative in its approaches to volume growth and market share, which may not work well over the long run. If the industry continues to consolidate, then Honda will eventually end up becoming a takeover target, with a rival company making an offer that it can’t afford to refuse.

    • 0 avatar
      NormSV650

      Do you see Honda or Mazda, both with the lowest number of models, the takeover target?

      • 0 avatar
        KixStart

        There might be a Chinese manufacturer that would like Mazda’s assets, especially the US dealer network. It’s not big but it’s way better than spending a decade trying to build your own. And people like Mazdas, they just don’t buy them all that often. By that, I mean that there’s value in the brand.

    • 0 avatar

      Well, as one Honda exec once put it “In the end, there will only be three automakers left – and Morgan.”

      • 0 avatar
        VoGo

        Yes, but HMC will be one of those 3. Fiercely independent.

        • 0 avatar
          motormouth

          I just finished writing 50,000 words about Honda, covering models, platform usage, supply issues and technology. I am still wavering between whether Honda could one day be a takeover target or whether it is likely to remain independent. From a takeover target, there’s a lot to like – very well thought out and flexible global manufacturing footprint, excellent R&D network. But the lack of depth in the model range could still prove to be the company’s Achilles heel. This comparatively shallow offering could undermine the (internal) push to sell 6 million vehicles per year by 2017 and if the company falls short of this target it might not be able to sustain itself, largely due to the inability to achieve cost savings in terms of part sharing across increasing volumes. The sharing of the Accord with the CR-V and Civic is a start, but it’s not enough and the typically slow new model launch time will further compound this problem).

          Honda may produce the most motorcycles and IC engines in the world, but I think the automotive element could be spun off into a group situation (a la VW, etc) and this would help address cost issues, while also giving the buyer instant access to some well-developed next-gen powertrain developments.

    • 0 avatar
      CJinSD

      Honda doesn’t just sell cars. Their global revenue is 115 billion US dollars. For comparison purposes, GM’s global revenue is 156 billion US dollars. Honda may be a small car company, but they’re not a small company. They build 14 million engines each year. Half of the 10 million they don’t build cars for are sold in Honda power equipment. They’re also the largest motorcycle manufacturer in the world.

      • 0 avatar
        hubcap

        +1–but Hero is the largest motorcycle manufacturer in the world. This is just speculation, but I believe Honda Powersports could considerably increase it’s profits and volume (in the U.S.) by offering more of the middle weight bikes that Europe gets that we don’t. Of course, that’s based on nothing scientific, just a few data points.

        • 0 avatar
          CJinSD

          I didn’t know that Honda had parted ways with Hero, much like they did with Kinetic. Will HMSI finally be their permanent Indian outlet?

          • 0 avatar
            Trail Rated

            Yes, Honda is now completely solo. Having overtaken the other two Indian makers, they only need to beat Hero Moto Corp’s monthly sales of half a million bikes and scooters. Honda’s plan was to be no 1 in India by 2020, looks like they might just do it before 2016.

            http://www.honda2wheelersindia.com/

      • 0 avatar
        Pch101

        The issue isn’t with Honda’s other businesses, but with its presence in the automotive market in comparison to its rivals.

        If the rivals grow while Honda doesn’t, then Honda becomes relatively smaller.

        If the rivals can use that greater size to create more efficiencies, then Honda will, by default, become less competitive.

        In a global automarket, less competitive is bad.

        There are a few basic ways that a company in Honda’s position could theoretically confront this without growing larger:

        -Get more efficient
        -Charge premium prices
        -Improve margins by moving upmarket

        Honda is already highly efficient, so there isn’t much upside there.

        Honda already commands premium prices, so it can only maintain what it has or go down.

        I think that we’ve all figured by now that HMC pretty well sucks at playing the upmarket luxury game.

        The small fish get eaten, and the other fish are getting bigger.

        • 0 avatar
          Toad

          “Don’t just do something, stand there” is not a bad philosophy for Honda. They are holding their market share (give or take a small amount), staying profitable, and have products that sell at a relative premium. If Honda just keeps doing what they have been doing there is no reason they will not continue to be successful.

          • 0 avatar
            VoGo

            Wait for the new Fit-based CUV. It will be very big.

          • 0 avatar
            Pch101

            If the global market consisted of the fifty United States, then Honda would be in fine shape for the long run. But it doesn’t.

            Honda does happen to have an exceptionally good grasp of the US mainstream market. But it tends to hit and miss abroad, and it fails to understand the luxury market in general. Those gaps pose long-term issues for the reasons that I have stated. Over the short run, though, things are pretty good.

    • 0 avatar
      hubcap

      Honda has an opportunity with Acura. Whether they decide to pursue is a different matter altogether. Their CUVs are selling well and in my opinion, design and to a lesser degree price point are holding back their sedans.

      I don’t subscribe to the theory that they need to be RWD. FWD and SH-AWD is more than adequate. If Honda decides to commit the resources needed to “fix” Acura sedans, they just might discover another strong revenue stream. The brand has a lot of pent up good will but it’s being continually squandered.

      • 0 avatar
        Rental Man

        Acura needs a design that would wow people abd create desirability. Think Acura Legend Coupe.

      • 0 avatar
        Mandalorian

        Acura gets more crap than it deserves.

        They have some of the best interiors on the market. I’m saying this and I OWN a 2012 Audi. I know interiors.

        Dropping the Legend name was a dumb move, the new TLX or whatever is replacing the TL should be the LEGEND. The Legend name had equity, plus it is a pretty cool name compared to 335, A6, S550, those sound like printers in comparison.

        Acura’s problem used to be lack of a V8, but much of the market has shifted to amped up V6s now, so there’s no reason Acura shouldn’t be able to give them a run for their money.

      • 0 avatar
        Pch101

        “Honda has an opportunity with Acura. Whether they decide to pursue is a different matter altogether.”

        I don’t think that they get it. (And I once met someone with Acura who pretty much confirmed as much.)

        Acura was formed as a way to sell Hondas for higher prices back when there were “voluntary” quotas. It was not a dedicated luxury brand, per se, and it seems that it still isn’t.

        There seems to be a cultural issue that bars them from grasping the nuances of the luxury market and how the Germans get to make (most of) the rules for it. Fortunately for them, this is becoming evident just as the premium sedan market is starting to yield to CUVs, which buys them some time in North America.

        • 0 avatar
          ccode81

          Very much agree, my first car at 18 was Honda Beat, loved it. but as income increase, I had nothing to return to buy.
          In Japan, the Honda dealer guys typically wear an mechanic suit in the shop, maybe hard to understand what non blue collar and matured people wants.
          These days they are recognized as a company doing something big in north america while concentrating in kei cars and compact Fit at home market. civic is gone, accord is only offered as 5 million yen PHV, which I never see on the road, and CR-V grown too fat.

    • 0 avatar
      jim brewer

      “Honda wouldn’t do“stupid things in the short-term that damage the person who bought yesterday.”

      In other words, Honda signals to its competitors to not discount. There was a time when you would get in trouble for that.

      • 0 avatar
        Mandalorian

        I would slot the MDX as a contender for top of class and TL as competitive.

        MDX is an EXCELLENT midsize SUV. Handles well, spacious, luxurious.

        TL is priced similar to the 3-Series, but it’s the size of a 5-Series and has a V6 (standard) and AWD (cheap-ish option).

  • avatar
    APaGttH

    Got to respect Honda for staying the course.

    Being number one in retail sales is a bigger achievement in my book than being number one in sales.

    The Detroit 2 and Fiastler have all done through their history unnatural acts to drive sales.

    Toyota is joining that party, stating last year they would do “everything” to keep the number one total sales status on Camry. Toyota publishes their finance rates and many dealers have feeds to that data. One quick example on a very short Google search, rates as of 8/19/2014

    http://www.scionofoxnard.com/Finance-Rates.aspx

    Toyota will happily finance your new car purchase for 75 months, at 21.40% interest, if you’re FICO score is 520. Basically if you have a pulse. Wait, it gets better – FICO below 520? They can still write the loan if you read the fine print, at 22.40%. Under 520 you’re basically having to try to destroy your credit.

    I see Toyota’s statement not directed at the Detroit 2-1/2 – but more directed at their Japanese rival who is doing unnatural acts to drive volume.

    • 0 avatar
      bosozoku

      “I see Toyota’s statement not directed at the Detroit 2-1/2 – but more directed at their Japanese rival who is doing unnatural acts to drive volume.”

      I’m assuming you meant Honda’s statement?

    • 0 avatar
      hubcap

      “Toyota will happily finance your new car purchase for 75 months, at 21.40% interest…”

      That’s one hell of an interest rate. I wonder if Yakuza enforcers are dispatched for those who are late on payments?

    • 0 avatar
      thornmark

      I’m renting a Camry SE now and it’s craptastic.

      I can’t ever imagine ever buying one w/o HUGE incentives. The interior is SOOO cheezy w/ Playschool plastics and controls.

      The best thing is that it’s quiet, but I’m getting poor mpg. Not a single good angle on the car. Even though it’s the “sport” model, I’ve never been cut off so often as people try not be be stuck behind this thing.

      • 0 avatar
        mike978

        Honda do discount, they just don`t publicize it with money on the hood. I went through the Edmunds Premier dealer program and was offered straightaway $21800 + TTT for an Accord Sport CVT (MSRP is $25400). This is over a $1000 below invoice. The dealer isn`t eating that so I presume Honda is helping the dealer out. Honda can then maintain that they do not offer customers cash on the hood while in reality offering cash to support retail sales.

  • avatar

    People *should* know better than to buy vehicles that they can’t comfortably afford. But the fact is, they don’t. And they’ll remember the time that Honda “scammed [them] into a rip-off loan” and the car got repossessed. They’ll remember that a lot more than they’ll remember the time Honda didn’t approve them for a new car, so they went and found something else. So this maybe isn’t such a bad strategy. Part of brand perception is how well the customer feels about the financing terms as well as the car itself, especially if it’s with the automaker’s own lending arm. This policy also helps brand perception as far as perceived value goes, because while you can walk into a Toyota or Nissan store and expect multiple thousands of dollars off of sticker price on a Camry or Altima (respectively), hardly anyone expects a major discount on a new Accord. Besides, there are still plenty of people with no kind of income challenges that buy Hondas…as well as Toyotas and Nissans. Their best customers probably fall *under* that umbrella, anyway…

  • avatar
    doug-g

    I just got a coupon for a $19.95 oil change if I will test drive a 2014 Honda. I’m wondering if it is worth taking a chance on my dealer’s service department? Honda needs to worry about more than selling cars.

    • 0 avatar
      mic

      In my town it’s 9.95 oil change without having to test drive. I got my timing belt changed by them with water pump for $329+ tax!

      • 0 avatar
        doug-g

        Goodness, those are fantastic prices for service! Please post the dealer’s website addy as many of us could no doubt drive long distances and still realize a savings. I’m sure the dealer would welcome the free advertising because he obviously is priced to compete and can use the business.

  • avatar
    Wscott97

    I’ve been seeing a lot of car companies offering 72+ months financing. I don’t understand why someone would want to make payments for so long. I really enjoy the time after you finish your payments and the car is all yours, not the banks. Also if you get into an accident the chances of getting screwed if the car is totaled is greater if you have a long term loan. You’ll be wasting your money on the gap insurance.

    • 0 avatar
      krhodes1

      Or you COULD put down sufficient funds up front (or a paid-off trade-in) to ensure you are never underwater on the loan. But that would be un-American, wouldn’t it?

      IMHO, if you can’t afford a decent down payment, you can’t afford the car. But then I won’t make payments on a car without a warranty, so that is a natural limit for me on loan length anyway.

      If you have solid gold credit and can get a free money interest rate on a long term loan, I can almost see it being worthwhile if you are a long-term car holder. Leave your cash making more cash, and use the vendors money to buy the car. But I still just refuse to owe money on a car with no warranty. It’s not entirely rational, I realize.

      As for Honda, I don’t get the fascination. Rusty, blue smoke spewing tin boxes is my general impression of them after growing up in Maine. But people sure seem to love them elsewhere. An Accord is better than a Camry or Altima, but as I have said before that is like being the prettiest girl at the leper colony.

      • 0 avatar
        KixStart

        “Rusty, blue smoke spewing tin boxes is my general impression of them after growing up in Maine.”

        Yeah. But they keep rattling along, dripping rust and spewing smoke long after their contemporaries have been scrapped. That’s the appeal.

        Don’t sneer at it until you’ve owned a couple for 10 years and suddenly realized you haven’t had to spend any major money on them.

        As for the term of the loan, sometimes there’s a cash rebate alternative. Consider both carefully. If you can get a loan for 2% elsewhere for a period you like and the cash rebate from the manufacturer, maybe that’s a better deal.

        • 0 avatar
          Wscott97

          I had a 2006 Honda Civic Hybrid that I bought new. Last month, I became the cream filling in an oreo cookie crash and the insurance totaled my car. Before the crash, I had 175,000 miles, never had a prob with my car and it still drove and looked like new. I ended up getting 10K for the car and used it towards a CT200H. There are reasons why people LOVE their Honda. They are reliable and they hold their values. If I wasn’t for the accident, I would still be driving my civic until the wheels fall off.

          • 0 avatar
            kablamo

            “oreo cookie crash” – LOL! Good thing you’re OK.

            I’ve found you can buy a 10yr old (or so) Honda for $5k – $7k depending on the model and condition, drive it for 2 or 3 years, then sell it for roughly what you paid. It’s great. Doesn’t work in the rust belt though.

      • 0 avatar
        dal20402

        Honda has a culture of really innovative and clever engineering. It tends to be subtle, but if you own a Honda for a long time you start to appreciate some of the tiny details.

        They are also as reliable as advertised. I’ve had three Hondas in my life (’88 Accord, ’04 TSX, ’06 Civic) and, even though the ’88 had been badly neglected before I got it and required a lot of work to bring up to safe standard, they all were as reliable as the sun.

      • 0 avatar
        TEXN3

        Maine sounds like another northeastern shithole.

        • 0 avatar
          krhodes1

          Coming from someone who is presumably from Texas, I will take that as a complement. Please stay in Texas, we don’t need you here.

          • 0 avatar
            Japanese Buick

            Ironic considering I’ve more than once heard Maine called “the Texas of the northeast”

            (I like Maine and have visited it often)

      • 0 avatar
        thornmark

        My Dad always called Fords “oil burners”. Honda was always an engineering company, something no one ever accused Ford of being. Connecticut is relatively free of Fords today.

        The more I learn about the history of the industry it’s a wonder that Chrysler, so superior in engineering to Ford, never reclaimed the #2 spot despite it’s somewhat errant styling, with spectacular highs and equally spectacular lows.

        • 0 avatar
          highdesertcat

          ” Honda was always an engineering company”

          Honda made it Big building 50cc buzzbikes, 125cc motorscooters and 175cc-350cc motorcycles, long before they thought of building cars and airplanes.

          Way back in the early 1970s I was able to buy a Honda 750 4-cyl motorcycle and it was a marvel of engineering, certainly much better than my Honda 350.

          And then came the marvelous Gold Wing motorcycles that swept up even more new riders with engines ahead of their time even when compared to car engines of that era.

          Honda put those same engineering skills to work developing their new line of cars in the 1970s. They must have been good at it, ’cause look at Honda now!

        • 0 avatar
          billfrombuckhead

          Mopar was 13,000 units behind Ford in retail sales last month, it’s coming.

      • 0 avatar
        DeadWeight

        It’s fantastically hilarious when a unabashed lover of all things Fiat actually goes out of their way to not rip on Honda for their much parroted blandness, but for their…

        …wait for it…

        …poor reliability!

        *rimshot*

    • 0 avatar

      72 months itself (6 years) for a car loan is hardly abnormal these days. That’s not saying it isn’t usually a bad idea, but it’s been common for some time. What’s alarming is this 96-month loan I keep hearing about. Raise your hand if you want to make payments on a car for *eight* years…

      On my new car, VW offered a really low interest rate and up to 72 months. I took 48. I’ll try and have it paid off within 30.

      • 0 avatar
        dal20402

        Why kill yourself to pay off debt early if that debt is at a really low rate?

        I got 0% financing on both of my cars, one at 72 months and one at 60 months. In both cases I made a big enough down payment to ensure I’ll never be underwater. I’d never pay an 0% loan off early, except in special circumstances (although special circumstances recently happened — by paying off one of the two loans early, I qualified for a lower interest rate on a mortgage thanks to lower DTI).

      • 0 avatar
        smartascii

        I take the longest term I can get, and then pay it off in 12 months. Why? Because it’s good for your credit to keep auto loans open for at least a year (and I want good credit for housing purchases), and because something might go wrong, and it’d be nice to have the smallest possible payment if it did.

        I’d be curious to know how many loans are paid off early and/or have remittance amounts higher than mandated by contract.

  • avatar
    HerrKaLeun

    Just fire that Acura “beak” designer and Honda will be fine.

  • avatar
    sproc

    So this. I still love my ’02 RSX and the way it looks, but the beak look jumped the shark so long ago. A car that paid off a decade ago but Still. Just. Works. is pretty damn appealing, though.

  • avatar

    When the headline said stupid stuff, I thought he meant the Accord CrossTour.

    • 0 avatar
      highdesertcat

      I’ve seen a couple of Crosstours on the road while traveling and they were driven by old people.

      Maybe the Crosstour is easy to get into and out of.

    • 0 avatar
      redav

      I’ve seen a disturbing number of crosstours, usually at the movie theater. I typically point them out to my friends, and we all have a good laugh at the poor soul who bought such a hideous car.

    • 0 avatar
      Zykotec

      I wish we could get the CrossTour here in Europe :(
      It would be nice to have something that was almost as ugly as the growing crowd of new Audi and BMW hatchback sedans (actually the A5 is quite nice looking, the guys who designed it should have been consulted when they made the A7), while still being relatively reliable, affordable , and even practical. Not to mention it would be a huuuge car by European standards. I miss large non-premium/luxury brand cars…

    • 0 avatar
      IHateCars

      Nah….Acura ZDX.

  • avatar

    Well I did my part to help, I purchased a new Civic four months ago…I’m counting on it lasting to 200k, and still be worth something then. :)

  • avatar
    dougjp

    Another bubble forming up fast. Look at the crazy high stats for car sales numbers. Remember the recession, take steps to conserve the value of whatever money/investments you have managed to accumulate so far. Just sayin’.

  • avatar
    ry6puwh7vybo8ghot8nowo9ly4ne4deth5ca7ghe6bo7he7gyc

    I used to work at a dealer. Gopher young kid. (Any job no one else wanted to do)
    As with many things in America, people can’t afford stuff in general.
    Debt can be wicked, and most people really don’t balance their lives and expectations to handle it.
    Oh, I also taught Finance at top 20 biz school; assisting the professor.

    My father grew up in the depression, enlisted in Navy after Pearl Harbor, and served 20 years; being on two ships that were struck by Japanese torpedoes. (CV-7 and CVL-22) He taught me to live beneath my means.

    Many used, affordable, decent cars out there to choose from. Learn how to repair them yourself. YouTube is treasure trove of How-To videos.

    I would like to have ONE nice car before I die. And enjoy others … as I can afford them, through various ways.

    Cheers.

    • 0 avatar
      kuman

      Dear good sir,

      Your advices is perhaps is the single most important advices anyone, anywhere in this world should listen.

      Most of my cars are second hand, which i fix to perfectly good and running car i can proudly drive anywhere. While i have bought new ones, and can afford to buy another, heck i even own businesses… i always try to look at second hand market first see if anything worth giving a second chance.

      Living humble life doesn’t mean you are poor, when you are happy, you are happy. Does not it all that matters?

      Cheers

    • 0 avatar
      schmitt trigger

      “He taught me to live beneath my means.”

      My father was born in 1927, also a child of the depression, and he had an adage:
      “A rich man is the one that spends less than he earns”.

      • 0 avatar
        highdesertcat

        schmitt trigger, my dad was born in 1917 and used that same adage.

        However, as a Good Portuguese Roman Catholic bent on being fruitful and multiplying, with 7 kids he always spent more than he earned, thus having to take on a second or third job, and requiring my mom to work full-time as well.

        But what really stuck with me all these decades after his death was another adage of that era he favored, “Be happy with what you have but always eager for more.”

    • 0 avatar
      FreedMike

      “YouTube is treasure trove of How-To videos.”

      +1 on that.

      The front driver and passenger power windows on my old Buick went out a couple months ago, and I was quoted $350 per window at my shop to repair them. I was going to go ahead, but for some reason, I decided to search up how to do this on Youtube. It’s actually a very easy repair.

      Total DIY cost: $100 or so for parts, and $7.99 for Coronas. God bless America.

      And as far as living beneath your means is concerned, you can do that one of two ways: 1) Live frugally; 2) divorce your wife. Believe me, number two will teach you frugality…

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