Beleaguered Honda hopes for gentler 2012
Execs say company on brink of a rebound
DETROIT— When everything seems to be going wrong, hire Jerry Seinfeld, bring back Ferris Bueller and pray. And even then things might not improve all that much.
That’s the predicament for Honda as it tries to recover from its troubles in the past year, when a series of natural disasters in Asia caused sales to plunge, and an important model, the revamped Civic, got such a poor reception that the company rushed to make changes.
Honda’s chief executive, Takanobu Ito, was so fearful that the company might be “jinxed” that he spent New Year’s Day at a Japanese shrine in the hope of eliminating the “bad omens,” he said recently.
In commercials in the U.S. for Honda shown during the Super Bowl, Seinfeld is desperate to get the first Acura NSX, a concept car not coming to market for several years, and Matthew Broderick plays himself, taking a Bueller-like day off away from the movie set and giving a shout-out to the Honda CR-V.
The two ads were highly rated by viewers, and Honda is off to a better start in 2012, breaking a string of eight consecutive monthly sales declines in the United States with an 8.8 per cent increase in January. But analysts do not foresee a smooth road back for the carmaker, whose market share dropped to 9 per cent last year, the lowest level since 2005. Its share was 10.6 per cent in 2010.
On Monday, Moody’s Investors Service cut Honda’s credit-rating outlook to negative from stable, citing “significant challenges” for Honda and doubts about how much market share the company can regain even after dealer inventories are back to full strength.
“Although Honda still has a good reputation, the competition in the auto market is getting tougher because its rivals have improved their product quality and brand accep- tance in the last several years,” Tadashi Usui, a vice president with Moody’s Investors Service in Tokyo, said in a report.
Honda executives, while projecting a 60 per cent drop in net profits for the fiscal year that ends in March, have expressed confidence that the company is on the brink of a significant rebound. One goal is a 25 per cent sales increase in the U.S. this year, helped by a redesigned CR-V crossover vehicle and several new models for its upscale Acura brand.
Honda unveiled the production versions of the Acuras, the RDX crossover and ILX compact car, this week at the Chicago auto show. They are part of a major push to expand Acura, whose sales last year suffered even more than the mainstream Honda brand. New York Time news service