Honda holds back until fall

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At a time of new-model proliferation, American Honda Motor Co.'s flagship Honda brand won't have its next major launch until fall-an eternity in an era that cherishes new products.

That's when Honda will introduce its newest-generation Odyssey minivan and its first hybrid Accord with a gas-battery engine. Honda's first-ever pickup is due early next year.

Eric Conn, assistant VP-national advertising at the automaker, says his ad budget for the fiscal year started April 1 won't rise much from last year's spending. "I'll probably try to hold off resources slightly so we'll have more money when all the launches come," he says.

The marketer reduced measured media by 3.8% last year for the Honda brand to $476 million, according to TNS Media Intelligence/CMR. Independent Rubin Postaer & Associates, Santa Monica, Calif., handles.

Honda extended a current TV spot showing owners who look like their cars via a casting call on hondacars.com for an online commercial. The submission deadline closed recently, but visitors can still see entries.

The Honda division says it's coming off its 10th straight, all-time record sales year in 2003, up nearly 9% to 1.17 million vehicles.

But for the first quarter of 2004, it saw unit sales drop 4.5% from a year ago, to 266,230 vehicles. To maintain its sales volumes in 2004, Mr. Conn says, Honda has been "helping along" several models with incentives, mostly financing deals. "The market is getting a little more competitive," he says. "There's a lot of rhetoric to get off the incentives, but who's going to volunteer to go first?"

Apparently not Honda, though the company has kept its offerings lower than just about everyone else in the industry. In February 2004, Honda had an incentive of $451 per vehicle vs. its monthly high last year of $519 in August, according to Edmunds.com, an auto information Web site.

Michael Chung, an analyst with Edmunds.com, says some Honda models sell without deals, including the Pilot midsize sport-utility vehicle, which brings down the average incentive. Still, he says, lately Honda has increased incentives on certain models like the Civic small-car line and Odyssey minivan, which gives some observers the impression Honda is revamping its incentive strategy. In comparison, General Motors Corp. spent $4,479 per vehicle in January 2004 and Toyota Motor Sales USA's Toyota brand spent $576, Edmunds.com reports.

beefed up lineup

Just two years ago, Honda had its most ambitious new-model blitz ever, significantly beefing up its lineup with likes of the Pilot SUV; tall, boxy Element SUV; and redone Accord. Honda exceeded its first full-year sales targets in 2003 for both the Pilot (106,917 units sold vs. 80,000 projected) and the Element (67,478 sold vs. 50,000 projected).

"The Accord is always our No. 1 priority and the Civic is No. 2," Mr. Conn says. "That's where our image is."

Consultants caution that Honda is more vulnerable to competitors, including Toyota and Nissan North America. "Honda's Teflon coating is beginning to scratch," says Todd Turner, president of CarConcepts. The automaker, almost invincible for so long, was innovative with the technology in its products. "But now it's a little more traditional and lost some of that mystique."

civi c catches heat

Jim Park, president of Global Auto Systems, says the latest Civic small-car line, redone as a 2001 model, hasn't been received well. In the 1980s, the Civic had a "great design" that gave Honda a unique feel. But the new Civic's styling is bland and without that emotional appeal of the past. Mr. Park predicts Honda will have to hike incentives on more models this year.

Civic sales fell 4% in 2003 to 299,672 units, and slipped 0.9% in the first three months of `04, to 73,149, Honda says.

Despite the naysayers, consideration for Honda vehicles has increased every year from 1997 to 2003, when it was 73%, accordingto CNW Marketing/Research. The figure translates to the percentage of shoppers who put Honda on their lists and bought one. Says Mr. Conn: "We are looking forward to our new 2005 products."

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