Honda makes a big play for US drivers

The company is growing here, but at a steep price. Spending on discounts and other incentives hit $2,206 per vehicle last year.

By Jonathan Berr Jan 31, 2013 1:28PM
Honda logo on the grille of an 2013 Pilot at the Honda dealership in Littleton, Colo. (David Zalubowski/AP Photo)Honda Motor (HMC), which Thursday slashed its yearly profit outlook, has big plans for the U.S. market. It has little choice.

Like all automakers, Honda's facing a recession in Europe and a slowdown in China. (For a closer look at the company's earnings numbers, click here.) The U.S. was a bright spot, as rising sales of the Accord sedan, the CR-V sport utility vehicle and higher-end Acura RDX pushed revenue in North America up 26% to $13.67 billion in the fiscal third quarter. Its U.S. market share grew to 9.8% in 2012 from 9% in 2011, according to the Wall Street Journal. 

American Honda said its sales last year rose 24% to 1.42 million vehicles in the U.S., the fourth highest total in its history. December sales were the company's second-best ever. The automaker hopes to do even better in 2013. About 40% of the company's worldwide sales come from the United States.

Honda's growth, however, came at a steep price. The company's spending on incentives climbed to $2,206 per vehicle in 2012, according to data from Autodata cited by the Journal.  Executives are prepared to offer even more deals to boost sales in 2013.

Shareholders are always leery of companies offering more discounts to move product, and Honda is no exception. U.S. shares of the automaker were trading down in early trading. They have jumped nearly 11% over the past year.

Automakers often brag in their ads that they are offering the "deal of a lifetime." In Honda's case, it may not be hyperbole.

Check out this video review of the Honda 2013 Civic EX, which is in a deeply competitive market right now.

--Jonathan Berr will drive his 2003 Honda Element until the bolts fall off. He doesn't own shares of the listed stocks.

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Tags: Autos


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