Honda eyes hybrid horizon

HONDA Australia has lowered its 2010 sales forecast from 50,000 to 42,000 but says it remains committed to returning to the 60,000 sales mark in 2013 with the help of four new hybrid models over the next 18 months.

The renewed hybrid model rollout was announced at the launch of the all-new Insight hybrid hatch on the Gold Coast last night, when Honda Australia also committed to releasing the CR-Z hybrid sports coupe next July, followed by hybrid versions of both the Jazz light-car and next-generation Civic small-car in 2012.

Like Toyota, which has also promised to introduce a hybrid version of every model by 2020, Honda Australia expects petrol-electric hybrids to account for 10 per cent of its total sales within three years.

From top: Honda Civic Hybrid, Honda Jazz Hybrid, Honda Insight.

However, the local Insight launch – which follows the introduction of Honda’s cheapest hybrid model in Japan by almost two years due to overwhelming demand overseas – was clouded by an uncharacteristically frank admission the Japanese brand is one of just a few car-makers to go backwards in an Australian new-vehicle market that is 13 per cent up so far this year.

Honda Australia general manager of sales and marketing Stephen Collins said the company now expected to fall 8000 vehicles short of the 50,000 sales target it had forecast as recently as August, representing only a marginal increase on its 2009 result (41,442).

With 34,608 sales in 2010, Honda is 0.5 per cent down year-on-year in a boom market, following a decline in sales of the Accord (down 28.5 per cent), Accord Euro (-10.6 per cent), City (-16.9 per cent), Jazz (-1.3 per cent) and Legend (-39.2 per cent).

The only Honda models to record a sales increase in 2010 are the Civic (up 6.9 per cent), CR-V (+36.7 per cent) and Odyssey (+34.1 per cent).

Mr Collins said Honda’s year-on-year shortfall was due largely to stock shortages of key models and the slump in large-car sales overall, which affected the Accord – a model that so far this year has comprised just over one per cent of Honda’s total sales.

“There’s no secret they (sales) have been lower than what we originally forecast in a market that is guaranteed to be over a million units this year,” he said.

“For the first quarter of the year our sales were down 13 per cent year-on-year and this was largely due to stock shortages across most of our volume models.

“In the April to June quarter Honda sales grew by a strong 26 per cent year-on-year, thanks to better stock availability, successful limited-editions particularly on Jazz, Civic and Accord, as well as the relaunch of the CR-V.

“Our June sales were particularly strong, with close to a five per cent market share, so all in all it was a pretty good quarter, but unfortunately the same could not be said for our July-September quarter.

“Sales were well below expectations, so we revised our target and we now expect to sell around 42,000 units this year.”

Mr Collins said Honda hoped to sell 47,000 vehicles next year, when he expected the overall Australian market to remain relatively stable at just over one million units. But he was adamant Honda would achieve 60,000 annual sales “within three years”, all but matching Honda’s best year in 2007 (60,529).

“One of our major challenges in this (third) quarter was the decline of the large car segment and the resulting fall in Accord sales,” he said.

“October was substantially better for us, with over 3900 units and a 4.9 per cent market share. A lot of this was due to the activity generated through our ‘Once a Year Day Sale’. In a month when the passenger car market declined year-on-year were pretty pleased with this result.

“So we certainly acknowledge that things haven’t gone quite our way this year in terms of sales. It’s been really a bit of a roller-coaster.

“Nevertheless we’ve been working really hard over the last 12 months to improve our position and today I can tell you about a number of initiatives that we believe will put us in good stead to achieve our long-term target of 60,000.”

Mr Collins reiterated the price cuts previously announced for many key models, but said many of them were yet to produce showroom results.

Specifically, the $5300-cheaper UK-sourced Civic Si hatch would not arrive until January, while Honda will not offer a front-drive CR-V until the next-generation model appears in 2012 to compete with the plethora of new sub-$30,000 2WD compact SUVs now in the market.

“To coincide with the launch of the updated CR-V in February we repositioned its pricing. There’s no question this segment remains under constant attention, with special offers, limited-editions and driveaway pricing making it extremely competitive.

“In August we realigned our Civic and City ranges in order to maintain our market share in the small and light-car segments, where competition has unquestionably intensified.

“We recently announced price rollbacks on key models, including Jazz, City and Accord Euro models. This was an important step to ensure we remained competitive and maintained or grew our market share in the long-term.

“At the same time you’d be aware that we announced changes to the Civic Si five-door hatch. With the introduction of a cloth trim model with manufacturer’s list price of $29,990. The Si with leather and heated seats is now an option starting at $32,190 – a substantial $5300 price reduction.

“We expect that will increase our sales in the small premium hatch market from around 50 sales per month currently to over 200 a month when stock becomes available in early 2011.

“Early next year we’ll also be revitalising our range with a number of significant specification and model upgrades to Accord, Jazz, Euro and Legend.”

Backed by a “huge” marketing spend including a new TV commercial, Honda expects the Insight – available from December 6 in two well-specified model grades priced at $29,990 and $33,490, with the VTi-L flagship forecast to comprise 65 per cent of sales – to attract a similar number of buyers as the Civic Si (200/month).

That would make the Insight more popular than Toyota’s hybrid icon, the Prius, which is priced from $39,990 and has averaged less than 150 sales a month this year.

Honda says it is not worried about the Insight cannibalising sales of the more expensive Civic Hybrid sedan ($34,490), which it says offers more luxury to justify its higher pricetag and attracts between just 25 to 30 customers a month.

While the more powerful, Japanese Car of the Year-winning CR-Z also will be more expensive than the Insight, next year’s Jazz hybrid should set a new price benchmark for a hybrid vehicle in Australia in the mid-$20,000s.

Honda Australia managing director and CEO Satoshi Matsuzawa said hybrids would be crucial to his company’s 2020 Vision 10-year business strategy.

“Today our future starts with the Insight – the first in a range of all-new hybrid models which we hope will ignite passion for the Honda brand,” he said.

“By the end of 2012 we will have four hybrids – Insight, CR-Z, Civic and Jazz. Together they will comprise 10 per cent of all our sales.”

At last week’s Los Angeles motor show, Honda revealed a purely electric Jazz to go on sale in Japan and North America in 2012, as well as a new plug-in hybrid platform for medium to large vehicles (potentially including the next Accord) destined for Japan and the US in the same year.

Mr Matsuzawa poured cold water on the chances of the Jazz EV, which employs battery technology from Honda’s FCX Clarity fuel cell vehicle, coming to Australia – where he said the CO2-reducing benefits of EVs were minimal due to our reliance on coal-fired power stationsBut he said a new Honda engine and transmission line-up – including a smaller new engine designed for Europe – to appear in 2012 was a chance for Australia if a business case could be established.

Insight project leader Yasunari Seki would not comment on the possibility of a plug-in version of the Insight or other hybrid models, but said a number of future technology options were now under development.

They include lithium-ion batteries – which are more advanced than the nickel-metal hydride batteries used by the Insight and Prius – as part of a joint-venture program with GS Yuasa, known as ‘Blue Energy Company’.

Honda says its hybrid vehicle focus will not come at the expense of diesel power, which remains absent from the Honda Australia range but could become available in 2012.

“We’re not ruling out diesel,” Mr Collins said. “We recognise there are a number of opportunities in a number of segments, but cost is an issue.

“The (price) premium needs to be reasonable – watch this space.”

Mr Collins said diesel power would not be seen in local Honda showrooms within the next 12 months.

What's coming fromHonda:
Insight	December 2010
Revised Civic Si	January 2011
CR-Z	July 2011
Civic replacement	Late 2011
Jazz Hybrid	Early 2012
New Civic Hybrid	2012
New CR-V	2012