While GM Kills Its Cars, Honda Keeps Them Around For Good Reason
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The Chevrolet Cruze, Impala, and Volt are dead. Instead, General Motors’ bread-and-butter division will focus on more affordable crossovers and highly profitable trucks for the future. Meanwhile, rival Honda has a very different picture of the future, and its passenger cars are a big part of it.
Automotive News (subscription required) reported on Honda’s peachy outlook for cars on Friday, and things look good for one reason: Generation Z. There’s little consensus for when the age bracket ends, but most agree this demographic is the “post-millennial” generation born in the late 1990s and early 2000s. And these youngsters really like sedans, coupes, and hatchbacks.
Often, these young buyers are purchasing their first car and cars remain far more affordable than a crossover or truck. Honda’s own data showed nearly half of first-time buyers looking at new vehicles chose a car. Honda itself still holds an impressive share of new-car sales, too. While the industry is somewhere around a 30 percent passenger car, 70 percent light truck mix, Honda’s mix is more like 47.5 percent car to 52.5 percent light truck.
With rivals like GM and Ford completely exiting (or nearly exiting in the case of the Chevrolet Malibu) the passenger car market, it gives Honda an even greater chance to court first-time buyers and young people. Just like the Big Three did last century, the hope is to keep them within the Honda portfolio for life. Perhaps they purchase a Civic first, then an Accord. A Passport could come next, then a Pilot as their family grows.
“Why would we turn our back on those customers, which represent the future of our brand?” Henio Arcangeli Jr., senior vice president of the automobile division of American Honda Motor Co., said.
It will surely be intriguing to see how automakers’ strategies play out. Will new buyers splurge for the market trend that is crossovers? Or will affordable vehicles bring about a resurgence of sedans? Time will tell.
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Source: Automotive News (subscription required)
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Culling cars don’t mean killing them as Malibu, Sonic and Spark still available also sedans are needed for the rideshare industry. Now Ford OTOH…..
“Why would we turn our back on those customers, which represent the future of our brand?”
Translation: “we’ve spent billions on great sedans just-in-time for the market to shift and us looking stupid so we’ve slapped-up an incompetent CUV (Passport) and hope to ride the market out until next cycle….”
Honda will get get it right but it’s good to see em gunk it up sometimes…
The competition is pulling out, meaning that even with overall declining sedan sales, Honda can maintain or even gain sales from eating up the former competition’s market share.
While Honda has already cut the shift on the Accord and is closing the production of the Civic in Europe.
They will maintain volume on global markets that most cars do not enjoy and continue to add CUV models just as everyone else.
Many tend to forget that the decline in car sales is in direct relation relation to the increase in CUV sales. What cars they are cutting are leading directly to CUV sales.
My Wife is one who went from a Grand Prix to a Terrain and now an Acadia with no intentions going back to any kind of a car. She is just one of millions who made the change.
That’s precisely what the situation is. They spent over $1B. On the redesigned Accord and sales have been terrible. But they need to stick with the sedan to recoup their money. I also find it hilarious that even GMA seems intent on perpetuating such false information. GM still makes sedans. That’s far different from the situation with Ford and FCA.
Hopefully the next Malibu will grow slightly in size (along with the Regal).
GM cannot afford to leave that segment. The Regal was always more successful when it was designed for the American market in particular, and there’s no reason the Malibu and Regal shouldn’t be more closely related. I also think that an all wheel drive wagon version of the Malibu should be considered, as the hot selling Outback has no real direct competition from Chevrolet. The RS model should also offer more performance options.
As for the current model Malibu – it seems to be holding its own, and I suspect there will be an uptick in sales when Cruze inventory dwindles and the Impala eventually goes out of production in Q1 2020.
Having a single car that covers the compact, midsized, and large sedan category is tricky but certainly not impossible. There needs to be a wide range of engine options and likely a variety of interior styles/trim/quality to cover a wider price range. If done properly, the Malibu and Regal can increase sales volume when they are finally not crowded by their smaller and larger alternatives within their own showroom.
I honestly do think we’ll get an Alpha based Impala replacement above Malibu for those those who want a performance sedan w/o breaking the bank.
“I honestly do think we’ll get an Alpha based Impala replacement above Malibu for those those who want a performance sedan w/o breaking the bank.”
Never.
And I’m not saying that just to be dismissive, but unless you want GM to make practically nothing on such a car (thereby having no ROI and a limited chance to fund a second generation or even a MCE), it’s never going to happen.
“performance sedan w/o breaking the bank” is a contradiction in terms. The SS was exactly what GM could do with the market. They didn’t undercut themselves, and GM sold every single one they made.
Dodge, on the other hand, has an ancient platform with terrible residuals, and frequently needs rebates to move Chargers off the lot.
And with the way most of those base Chargers are optioned, they aren’t what you or I would call ‘performance sedans’ either.
So hope GM have a solid plan to pay for Alpha sedans other than razor thin margins coming from CT5/4. Malibu may not have much room to move unless GM will keep updating it on Ep2 or the Malibu is replaced by a CT5 based sedan with a Regal version also.
“And with the way most of those base Chargers are optioned, they aren’t what you or I would call ‘performance”
What you call the base Mustang/Camaro/Challengers then?, Hell even the Vette have a base model. Base models better appeal to non-performance buyers otherwise the car’s history. The Charger even in the muscle 60s had base 318 models.
“So hope GM have a solid plan to pay for Alpha sedans other than razor thin margins coming from CT5/4.”
The margins for Cadillac are not razor thin, thankfully. Cadillac is not in the business of selling for the lowest market price, nor is Cadillac’s focus on volume sales. That’s where Chevrolet steps in.
“What you call the base Mustang/Camaro/Challengers then?”
Performance coupes, because they definitely aren’t performance sedans like you had wanted right from the start.
That alone should tell you something; that most people who want a car with more power don’t always want one 4 doors. Those that do are willing to pay for the privilege of having it. That’s where Cadillac steps in, not Chevrolet.
I guess the Vette and Camaro an trucks should be Cadillacs then if Chevy supposed to be cheap POS Asian copies.
A base Camaro do have some performance in it but a far cry from the V8 models, but that’s the point to have a non-performance model appealing and selling so you can have the performance models.
A CT4 selling at 1000 or so per month isn’t generating nearly enough cash as would a Malibu at 10,000-15,000 cars a month. My overall point stands as it would be wise for GM to offer a Chevy mainstreamer based on the CT4/CT5 so performance Cadillac sedans exist without fear of the chopping block. Please don’t use the SS an an example as it came loaded, $45-$50k,one V8 only, took months to deliver and look a bit bland.
For Cadillac, it had the XLR.
Cadillac’s Camaro is the ATS and the ATS coupe. The Escalade range fills out the rest when it comes to the K2 trucks.
The CT4 won’t need rebates to move that many, and GM won’t need end of year fire sales either; sales and rebates that would diminish their ATP and ruin the car’s resale value. You might be able to take a hit on resale values for a Malibu if you intend to drive it into the ground for the next 7 years, but the market the CT4 is in is entirely leased. Nobody leasing a car in that segment wants a car that is worth below average at the end of the term.
MY point is that I don’t want the Chevy/Cadillac sedan relation to end up like the Dodge/Chrysler relation; where Chevy sells a mechanically similar car that fully overlaps the whole range of prices where Cadillac has no ability to command more. A situation where not even hi-po models from Cadillac cannot command more than the mechanically identical Chevy.
As for the SS, for the price you got a completely better package than ANY G8 GXP. Price was no barrier when the totality of the offering was simply better, and the SS wasn’t saddened with the baggage and shame that Pontiac had at end of life (remember ‘the American BMW’?)
You think that I’m implying that GM just restyle the CT4/5 into Chevys and Buicks will no additional work is wrong.
For examples IMO a Chevy “CT4” won’t have 2.7t power, leather interior, CUE, MRC , Supercruise but pickup where the Cruze left except an optional 2.0t over a base 1.6 and (why not?) a 5.3 v8 SS model as CT4 V+ would get 3.0tt/awd.
Same for a CT5 based Chevy but will get a 6.2 V8 on top as for the CT5 V+ will get Blackwing or LT5.
Having a mainstream performance Chevy sedans won’t step on Caddy’s toes.
“and (why not?) a 5.3 v8 SS model as CT4 V+ would get 3.0tt/awd.”
Because this kind of overlap is not what GM needs. Its the exact same unnecessary advantage the Charger has over the 300, and GM doesn’t need to run Cadillac completely into the ground with that kind of arrangement.
Stepping on Cadillac’s toes is not enough. Cadillac needs to remain at the top of GM. Period.
Two thoughts I have on this. First, I wish to make a statement about Honda itself. What a turd of a company! I sold Honda along side Buick, Cadillac and GMC for 11 years at one dealership. I’ve seen first hand what Honda does and how they do business. I’ve watched up close to how they deal with customers who are having issues (and there were many). I’ve been on the receiving end of that companies “we are better than you” attitude. Let me say that there will NEVER be a Honda in my garage. Only company worse than them? Toyota!
Second and more to the point of this article. As we all see and read about daily here and on other sites, the market is really global now. Example: The Trailblazer and Encore being built in South Korea yet the Sonic is built in the states. My point in this is that you have cars from GM being sold in large numbers in other countries (China being the largest). Because this has become such a global market, if the buying trend moves from SUV/CUV’s back to cars, GM would not have much of an issue ramping up cars again from the other countries. This would allow them to re-tool plants within the USA to produce those cars here (we would hope).
I can weirdly agree with this. For some reason, Honda buyers are all in some sort of cult. I have no clue why nor how.
My best friend drives an Accord, and his parents both CRV’s. Whenever we talk abut our cars, its always “mine is the best” or “Honda is so great”. We all know that an Accord will never outdo a Silverado though.
My uncle bought his first Honda in 2004 (a Pilot), ever since hes only owned Honda (2 pilots and a CRV) and wont even look at another brand.
My part time boss is a great guy, but he too fell victim to the “Honda virus” as well. He drives an F150, and his wife owns a 2007 Tahoe. He loves both of em, and knows they are great cars, but recently he leased an Accord just for road trips and easier city driving and he wont stop talking about how wonderful it is. Like I mentioned earlier….No Honda will outdo Chevy nor even Ford.
On a positive note, one of our family friends bought a 2017 Ridgeline after 2 Avalanches, and I’m happy to report that after 2 miserable years she just bought a Suburban. She claims leaving Chevy was the worst thing she ever did.
i think you just explained the honda virus.
these people bought hondas and they’ve been satisfied so they continue to do so.
it isn’t that complicated unless all of these people are gluttons for punishment.
@Steve:
Henry actually hit the nail on the head quite well. It’s not that they are so satisfied. I would need several sets of hands to count the Honda owners with numerous issues that are “satisfied” and would never leave Honda. Yet, they all seem to know someone who once owned a (fill in the blank with any GM, Ford or Chrysler product) and had nothing but problems with it, so they defend having a Honda (or Toyota) because of that. Funny thing, I had a guy come in looking for Honda. As I began to show him the features and talk to him about it, all he could do is bash the Buick and Cadillac’s sitting on the lot. Three times I re-directed him back to the Honda and began to sell the car. All three times he went back to bashing the GM’s. Now keep in mind that I personally drove a Buick then, my entire family did and we never had any real issues. So I stopped him dead in his tracks and told him I personally drive a Buick and wouldn’t ever buy a Honda. This kind of made him take attention and then I walked away to get another sales person who would work with him. I was done! Found out his “beef” with GM went back nearly 20 years to an issue he had with rear brakes sticking on a Chevy Citation! Really?
So my point isn’t that Honda vehicles are that bad. It’s the company and the people who generally drive them. Annoying as hell and they will go out of their way to tell you and everyone who will listen just how great they are. Yet I’ve personally seen the many issues Honda’s do have and that alone would keep me from buying one over a Buick or Jeep.
i think your point illustrates gm’s dilemma.
a lot of people had a bad experience with a gm product from the 70s, 80s … and they switched.
they found a better alternative and today they are stuck with their impression from decades past.
now gm is outside looking in. they have to work extra hard to get that customer back with not only with good product, but really good product.
and you can’t blame the customer. a car is a big expense for most people and they don’t want to get screwed again.
so a car like the cruze was pretty good. but if your last impression of chevrolet was a bad one, why take a chance?
@steve:
Although that may be true, why does it not seem to happen to Toyota and Honda? Those two companies have put out some real junk, but it doesn’t mean they are all junk. And some people that I’ve sold Honda’s to have had many issues and yet they will stick with Honda come hell or high water. Why? That is my question. These are people who will make excuse after excuse about their Honda or Toyota yet say they will never go back to GM (or Ford/Chrysler) because an issue they had many years ago? What gives? And don’t get me started on how Honda/Toyota go to great lengths to hide problems while telling some customers that their cars don’t have problems? That is exactly what a regional service manager from Honda told one of my customers: “Our cars don’t have problems”.
There’s a very old saying in Japan: If it stinks, put a lid on it. Honda and Toyota are the masters of that.
My uncle was a devout Ford, Buick, and Chevrolet fan. He drives a lot and over the years he had a 1987 Ford Taurus, 1992 Ford Taurus, 1988 Buick Park Avenue. He got so soured after those two Taurus’, one day saying he paid more than he bought the cars on repairs. He drove the old Park Avenue to 300,000 miles, and upgraded to a 2004 Buick LeSabre. He had so many issues with that Buick, mainly all of the power window motors failed at least once to the point where he stuck wooden blocks in the windows to keep them shut. It’s very common in our area to see a GM vehicle such as an Impala, Park Avenue, Lesabre, Grand Prix with windows sealed shut because the motors are a pain and fail often. He also complained of mechanical issues and quickly dumped the car. He bought a Toyota Sienna and is still driving it to this day without an once of trouble. He gave up on his favorite car brands and switched to Toyota.
@john s:
Because Toyota’s just never ever have issues right? Wrong. And what you said above is exactly what I was saying. But here’s a flip to that. My family and I have owned many (many) GM products and most of them Buicks. None of us have had that problem, and I’d know because I sold most of them. So if there was an issue, they’d have ripped me up. There were many in that same year range as well. My parents alone had 1985, 1988, 1991, 1992, 1997, 2000, 2007 and now a 2010. All Buicks and the only real issue they had with any of them was a bad transmission on the 1985. Yet had they gotten all bent up about that transmission, they would have never purchased the rest.
Now about Toyota. How many cheap hubcaps are missing on so many different models? Any why does Toyota still seem to feel it’s ok to use hubcaps on cars costing well over $20,000? (all new Rav 4????) Or how about the 2.4L engine sludge issue that affects hundreds of thousands of Toyota’s? Or how about all the Prius’ and Scions running around with the rear hatch handle trim plate missing or taped on? Oh, I could go on, but……
None of those issues applied to his Toyota van, and he takes care of his cars too. Living in America’s heartland he puts on quite a bit of miles. I agree, it’s odd that toyota still puts hub caps on cars, but no one I know who has them or loses them seems to mind. Even certified used Toyotas I have seen have come with aftermarket hubcaps and they still sell for full price.
YES!!
My uncle had quite a few issues in his second Pilot with the exhaust system and the alternator (he went through 3 of em in 5 years/127k miles. that sounds like quite a few to me.
My friend also had quite a few problems. since last July he has put a total of $3600 into his 2010 Accord with only 97k miles on it. Between an alternator, a trans reprogram, various exhaust components, and components of the braking system.
My dad spent $300 on his past 2 GM SUVs (Yukon XL, Suburban) for a power steering pump on 1 at 110k miles. I would much rather take a GM over a Japanese car.
Its not satisfaction….its a false sense or quality.
Very strange since they are stainless steel components. Talked to a Honda Engineer, and he said they rarely have to replace exhaust systems. I also talked to my local Chevrolet guy and he says there’s been considerable amount of problems with the I-4 engines having to come back for rebuilds due to oil consumption and the 3.6 has an issue where it jumps time.
The “Honda” guy can say whatever he/she wants. I know we always had exhaust issues on the Honda’s all the time. Even though they used stainless steel, it didn’t matter. It was all paper thin and they rotted out non-stop. One lady I had sold a Honda Civic to got so tired of paying for new exhaust every 7 to 10 months, that she traded it in on a used Buick. She told me down the road it was the best move she ever made.
Must be a “Detroit” thing, as I have never heard anyone ever say their move from a Japanese car to a GM product outside of a Silverado/Tahoe has ever been a good thing. I’ve heard too many horror stories of 2.4 GM motors of late needing complete rebuilds under warranty and 3.6 Motors having problems. This is the internet and you will find anything you want to prove your point.
Gen Z gives me hope. I much prefer a car to an SUV. Maybe we can get them to learn how to use a clutch as well.?
Honda has no full size pickup offering, and its mid size Ridgeline sells at one fifth the volume of the GM offerings. So of course its overall sales are going to be more skewed towards cars, they have to be mathematically. It’s not proof of anything other than each carmaker does better in certain vehicle segments than the other.
Changing the cars is not the problem, changing the people who buy is!!! The mentality of the people today that buy cars is pathetic. What people value today in a sedan is a insult to the history of the car.
Cup holders, map pockets, sun glasses compartment is the focal point of these buyers. Performance is gone, handling is non existent, braking is a joke.
Telling these people who are obsessed with Honda’s and Toyota’s sedans is like talking to dead people. I guess people today love bland cars, with zero performance.
It’s sad if you ask me
@Brian:
Can I ask why you say this? Although I think I get your point and I certainly agree that all people on the road need to get back to driving and not playing on phones or in-dash i-pads! There is certainly nothing wrong with a useful cup holder or storage pockets or a place to store sunglasses, is there?
But where I really have to disagree with you is on the handling comments. Today’s cars handle so much better than cars of years ago. Braking is better. The improvements all around the entire automotive world are there. I feel they are taking this too far. You can’t hardly buy a basic car/suv today without lower profile tires, big rims, overly firm seats, stiff rides, etc. What we need is a better balance between sportier vehicles and ones that give a better (more isolated) ride quality for those of us who don’t want to tear up the race tracks.
But yes. There are a lot of bland people out there buying and driving bland cars, and Honda/Toyota fill that space quite well.
I live near a car dealer strip that sells every brand from Aston Martin to Toyota, Volvo, Chevrolet, etc. General Motors and Ford build plenty of bland cars as well so its a poor argument to say only Honda/Toyota fill that space. My local Chevrolet dealer has a gluttony of very boring, sad Malibu’s lined up that look very bland. They move slow off the lot despite cash literally sitting on the hood. True, you can probably option out the car and make it sportier, but you can do that to a Honda/Toyota as well.
The market is also pushing for very complex infotainment systems as well more than cup holders, etc. People seem to be more interested in hooking their Iphone/Android to the radio then what engine the car has.
It will indeed be interesting to see what happens to sedan sales with Honda, Toyota, Nissan, the Korean twins and the Germans still in the game with the big 2 1/2 eliminating all but a couple of choices for each division at GM and the sports cars at Ford and FCA. My guess is that the German marques will continue to see small improvements and the Asian companies will stay pretty much the same with slight declines year over year.