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With New Accord, Honda Hopes to Regain No. 1 Spot

Autos: Innovations led to lower costs for a bigger car sold at the same price. Analysts call revamped model a benchmark.


DETROIT — Shortly after introducing the fifth-generation Accord in 1993, Honda Motor Co. dispatched a team to gauge consumer reaction to its flagship car.

While most owners and shoppers seemed satisfied with the car's quality, handling and relative value, they readily tossed out some cutting criticisms: It was cramped, too noisy and lacked power.

The findings did not bode well for a vehicle that once was the top-selling passenger car in America and hoped to wear the crown again.

Honda quickly set out to fix the car's shortcomings. The result is a 1998 Accord that is bigger, more powerful and quieter. Just as important, it will not cost any more, and in some cases will cost less, than the previous model.

Early assessments by auto experts suggest that the new Accord, which arrives in dealer showrooms Sept. 24, is poised to set a new standard for entry into the important mid-size car segment, a high-volume arena once dominated by Detroit creations.

Chris Cedergren, an analyst for the auto-forecasting firm Nextrend in Thousand Oaks, said the new Accord establishes a benchmark against which other mid-size cars will be measured.

"It's really flawless," he said.

Such unreserved praise is unusual among the enthusiast car crowd, which normally points out a vehicle's flaws faster than a Corvette goes from 0 to 60 mph. So unrestrained are some analysts that they are already predicting that next year the Accord will again become the best-selling car in America. It will have to supplant the Toyota Camry, this year's expected winner, and the Ford Taurus, champ the previous five years.

"The Accord has a better-than-even shot at recapturing the title as the No. 1 seller," said Joseph Phillippi, an analyst with Lehman Bros. in New York.

In many ways, the sedately styled Accord symbolizes the continuing rejuvenation of the Japanese auto makers, which are again grabbing market share from Detroit's Big Three in an increasingly competitive and sluggish car market.

The vehicle, which reigned for more than a decade as one of the most popular cars in America, provides a case study of how the Japanese are continuing to cut costs without sacrificing quality or scrimping on creature comforts.

Honda reduced engineering and manufacturing costs by 20% in the new model, allowing it to hold or lower the Accord's retail price but maintain a healthy profit margin. It is a formula first used by Toyota when it brought the Camry sedan to showrooms last year priced as much as $1,750 lower than the previous model.

The Accord also shows how the Japanese are increasingly adept at using common platforms--the basic underbody of a vehicle--to build at minimal cost several vehicles attuned to differing nations' tastes.

Using the same chassis, Honda is producing distinctly different models for North America and Japan. It can build a sporty coupe on the same line as the sedan, and soon will add Accord-based minivans and sport- utility vehicles.

The Japanese cost-cutting began several years ago when the auto makers' fortunes flagged because of an economic slump at home and a strong yen that made their products more expensive abroad.

Since then, Honda and Toyota have benefited to some degree from a weaker yen. But the currency gyrations have become less important as they have moved more manufacturing operations here and bought more parts in this country. All the 1998 Accords sold in the United States will be made here.

It is hard to exaggerate the importance of the Accord to Honda. The vehicle accounts for half the company's sales and profit. The company earned $529 million in its fiscal first quarter ended June 30, up 36% from a year ago.

"Honda goes the way Accord goes," said Cedergren. "It's their highest-volume, highest-profit vehicle."

Honda, which first made its mark worldwide as a motorcycle maker in the 1960s, introduced the Accord in the U.S. in 1976. It began making the vehicle in Marysville, Ohio, in 1982. Soon it became a favorite of baby boomers attracted by its reliability and easy handling. In the mid-1980s, the Accord was in such demand that dealers charged premiums of $1,000 to $2,000 above the sticker price.

By 1989, Accord had become the nation's top-selling passenger car, a title it held for three years. It was supplanted by Taurus, which held the No. 1 ranking for the last five years. Camry should take top honors this year.

For Honda, the Accord's fall from the top was softened by the growing popularity of its subcompact, the Civic, whose sales topped 280,000 the last two years. Some buyers saw the Civic, which was enlarged in 1995, as a cheaper alternative to the Accord, among the smallest cars in the mid-size class.

The Accord remains immensely popular, however. Honda has sold an average of 362,000 Accords annually for the last five years and the car is the perennial leader in retail sales to individuals. Taurus has kept its sales higher by marketing to commercial fleets and giving rebates of up to $1,500 to buyers.

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