Slowdown? What Slowdown? Ever-cautious American Honda Predicts Record Sales In 2017

It took eight years for American Honda to break 2007’s U.S. sales record. But after muscling past the eight-year-old barrier in 2015, the Honda brand shot past the new mark with ease in 2016.

And Honda, typically prudent-verging-on-pessimistic, intends to report record sales at the end of 2017, as well.

“We have new product launches like CR-V and Civic and we have some other new products,” American Honda executive vice president John Mendel told Wards Auto, referencing the 2018 Odyssey and presumably a tenth-generation Accord.

Even among optimistic forecasters who believe 2016 did not represent peak U.S. auto sales, growth projections are marginal. In general, however, a modest slowdown is the more likely outcome. A Bloomberg survey of 10 analysts shows an anticipated 1- or 2-percent drop from 2016’s high water mark.

The Honda brand closed out 2016 up 5 percent from 2015’s record performance, and did so with limited exposure to the sometimes low-profit world of daily rental fleets. (Automotive News estimates that American Honda earned 2 percent of its 2016 volume from fleet sales, compared with 9 percent at Toyota, 21 percent at Hyundai-Kia, and 19 percent at Nissan.)

Honda’s record 2016 was also marked by limited incentivization. In December, for instance, ALG says Honda’s incentive spend rose to an average of $2,154 per vehicle, but that was still 41 percent below the industry average.

Among major automakers, only Subaru uses incentives more sparingly.

PRODUCT

Last year, Honda benefited from small car success with both the new Civic and the made-in-Japan Fit, a compact and subcompact that combined for more than 35,000 extra sales.

This year, Honda adds halo cars to the Civic lineup: a new Civic Si coupe and North America’s first Civic Type R hatchback. As we reported previously, Mendel told Wards that, if necessary for the Civic, “We can lean on Japan for production if we need to.” The Civic Type R will join the rest of the hatchback lineup on ships sent from the United Kingdom.

Indeed, Honda has such faith in the Civic despite the struggles of America’s passenger car market, which slid 9 percent in 2016, that Mendel believes it may still be the brand’s best-selling model in 2017. “There’s a very good possibility the CR-V will be on top, but the Civic will have more bullets in the gun as well, so we’ll see,” Mendel says.

Honda is nevertheless expanding production for the all-new CR-V, though the intention is not to chase Toyota’s surging RAV4 simply in order to hold onto the CR-V’s crown as America’s best-selling SUV/crossover.

The CR-V and Civic both posted record annual U.S. sales in 2016.

As for the new Odyssey, a van that actually generated more sales in 2016 than its Pilot stablemate, production alterations at the Lincoln, Alabama, plant where the van, the Pilot, and the Ridgeline pickup truck will allow for greater supply at Honda stores, too. All Acura MDX production is moving out of Alabama to Mexico Ohio.

Honda’s John Mendel sees no shortage of warning signs for the industry at large, painting with a broad brush when it comes to long-term loans, fleet reliance, and incentives. “Especially if overall demand softens to, say, 15 or 16 million — still good business, by the way — that’s when the tail of this whip really comes around to smack the holder,” Mendel told the Automotive News World Congress.

But Honda isn’t the holder. As a result, expectations for Honda’s 2017 are high.

Timothy Cain is the founder of GoodCarBadCar.net, which obsesses over the free and frequent publication of U.S. and Canadian auto sales figures. Follow on Twitter @goodcarbadcar and on Facebook.