Honda Exec Says Passenger Cars Are Company's Future

Passenger car sales may be sinking as fast as Tesla’s share price, but an American Honda Motor Co. executive said they represent money left on table by automakers dropping them from their product lines and the company’s future.

“I wanna tell you. At Honda, passenger cars matter,” said Henio Arcangeli Jr., senior vice president, automobile sales division at American Honda Motor Co. during a presentation at an Automotive Press Association in Detroit on Friday.

His logic is simple. Even though passenger cars represented only about 30% of sales in the U.S. last year, that’s still about 5 million units up for grabs. Since Honda doesn’t sell its vehicles at cut rates to fleets, all of its passenger cars are sold for higher prices at retail making them fairly lucrative.

The three Detroit-based automakers have all but abandoned passenger cars in favor of more expensive, and popular pickup trucks, SUVs and CUVs, leaving Honda, and other foreign automakers a chance to fill that vacuum for those customers who can’t afford, or want them.

“If you also consider that many of the domestic manufacturers are slowly pulling out of the passenger car business, that leaves a great opportunity for Honda to grow our share and obviously gain volume,” said Arcangeli.

Who are those people not pulled in by pickups or SUVs? Many of them, said Arcangeli, are first-time buyers–especially those considered Millennials or Generation Z customers. 

Honda research, he said, found that 55% of first-time buyers are not buying pickups, SUVS,  CUVs or minivans, and that number spikes to 70% for first-time buyers who belong to Generation Z. Instead, said Arcangeli, they are snapping up passenger cars.

“This is a very important strategic focus for Honda to be very strong in and that’s the part of the business that’s the future of our business,” he said.

The strategy appears to be working. Arcangeli said Honda surpassed Toyota Motor Co. in 2018 as number one in retail passenger car sales in the U.S. and was extending that lead in 2019.

To cut costs and raise efficiency and quality, Arcangeli said Honda plans to build fewer models in each plant. The company will also streamline its trim and option offerings.

Arcangeli noted two-thirds of the Honda vehicles sold in the United States are built here. But in answer to a reporter’s questions, said the company, along with the rest of the industry is concerned about the escalating tariffs Pres. Donald Trump has placed on goods imported from Mexico to force that country to do more to reduce the flow of Central American immigrants who may ultimately attempt to enter the U.S.

“We’re very hopeful both the United States government and Mexican government can work through these challenges and get back to business as usual,” he said.