Honda sees the future in cars and Gen Z, says Arcangeli
3 June 2019 - Automotive News
DETROIT -- Honda is killing it with crossovers such as the CR-V, HR-V and resurrected Passport, with nine years of continuous sales growth for its utility-vehicle portfolio.
But so is everyone else in the industry, with Detroit brands betting the business on light trucks.
But Honda is also killing it with cars -- rather than killing off cars -- and that's because younger consumers such as Gen Z and first-time buyers in general are showing a preference for sedans, coupes and hatchbacks, which the Japanese automaker has with its bread-and-butter Fit, Civic and Accord models, said Henio Arcangeli Jr., senior vice president of the automobile division of American Honda Motor Co.
"What's perhaps more unusual and important for us, however, is our cars. We all know the narrative: Cars are dead and dying. That's certainly true for some, but not for us. Our story is a little different," Arcangeli said Friday at an Automotive Press Association event here.
The Honda brand remains an industry outlier, with a vehicle mix of 47.5 percent car to 52.5 percent light truck in a market that's running about 30 percent car to 70 percent light truck. And it's managed to pick up some car share along the way.
"We've also been able to maintain a strong car presence, growing our share of this still roughly 5 million-unit market," Arcangeli said. "But cars really matter for another fundamental reason: the future. Cars play a crucial role for Honda in attracting and retaining new buyers, particularly young buyers, millennials and Gen Z."
Data gathered by Honda shows that more than half of first-time buyers of new vehicles choose cars, "not an SUV, minivan or pickup," said the auto executive. "And for Gen Z, that jumps to 70 percent." That means for Honda, cars are partially about survival. "Why would we turn our back on those customers, which represent the future of our brand?"
In his presentation, Arcangeli noted that the Detroit automakers are discontinuing their sedans in the U.S. for lack of market interest. Seven cars are exiting the market this year: the Ford Fiesta, Focus, Fusion and Taurus; and the Chevrolet Cruze, Volt and Impala.
"So, we're dominating the front door with new buyers, with cars playing a critical role," he said. "Gen Z today is still a relatively small share of the market, but it's growing daily, and Honda is in the early lead."
Arcangeli sees the overall new-vehicle market in the U.S. softening, but still hitting a relatively high level.
"In terms of the market we're in, the consensus opinion is that we're looking at sales that would top out at a 16.9 million-unit year, which would be about a 2 percent decline from last year," he said. "We've been north of 17 million for years now, but high 16s is still a very solid market."