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Honda to Redesign Slumping Accord

The carmaker plans substantial changes to the exterior styling and engine power.

June 15, 2005|From Bloomberg News

Honda Motor Co. said Tuesday that it planned what it termed substantial modifications to its Accord model in an effort to reverse a slump that might lead to the company's first U.S. sales decline in 12 years.

"We're planning some fairly major refreshes coming this year," said John Mendel, sales chief for American Honda Motor Co., the Japanese company's Torrance-based U.S. arm.

The changes will address what customers view as the current Accord's shortcomings, including exterior styling and engine power, he said. The latest Accord is about halfway through its four-to-five-year model life.

In its attempt to boost U.S. demand, Honda is trying to regain share in a market that has accounted for 43% of its global sales. Accord sedans and coupes, which made up 25% of Honda's total U.S. sales through May, have fallen 9% to 143,304. Honda's annual U.S. sales haven't fallen since 1993, the longest growth streak in the market.

"Accord is Honda's symbol in this market. They'll do what they have to to protect it," said Jim Sanfilippo, executive vice president of Automotive Marketing Consultants Inc. in Bloomfield Hills, Mich. "It doesn't cost much to bend the sheet metal a little differently to improve the looks, so that's an easy option."

The drop for the Accord as well as the Civic -- a small car that is Honda's second-biggest-selling U.S. model -- cut the company's U.S. sales 0.7% this year through May to 565,948. Civic sales are down 15% this year, in part because Honda has reduced production ahead of the release of a redesigned version due in about three months.

Despite the declines this year, Honda will maintain its annual streak of overall U.S. sales growth, said Mendel, who declined to estimate a percentage increase.

Honda, No. 5 in U.S. auto sales, has relied more on cars than larger competitors General Motors Corp., Ford Motor Co., DaimlerChrysler and Toyota Motor Corp., which sell more sport utility vehicles, pickups and minivans.

Amid falling U.S. demand for cars, Honda has added its first pickup, boosted production of SUVs and minivans and plans a second SUV for its luxury Acura line.

Accord sales may have been hurt this year as Honda dealers focused more on selling newer, more expensive models such as the Ridgeline pickup and Pilot SUV, Sanfilippo said. "My sense is a lot of dealers are a little bit enamored with selling these new trucks."

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