Fleet News

Honda drops hatchback in upmarket sales drive

WITH the adrenalin buzz of an all-new Accord in the pipeline, Honda has avoided the traditional temptation of manufacturers to forecast booming sales and sector domination.

Instead, Honda is forecasting sales significantly down on the current model, commensurate with the new Accord's steep move up-market.

Today's Accord sold about 20,000 units in its best year, yet Honda anticipates annual sales of just 6,000 for the new saloon, and 8,000 for the estate version that arrives later next spring. The lower volumes are easier to accept because production of the car will switch from Swindon to Japan, so Honda UK will not be under undue domestic pressure to shift units, which should spell good news for future residual values.

However, the import strategy will prevent Honda from building cars to order, with the vast majority of customers having to hope that their ideal car is available from stock – not quite the build-to-order approach of Audi, Volkswagen and Volvo, from whom Honda plans to capture customers.

About half of these customers will be company car drivers, a smaller proportion than the 60% of corporate buyers for the current model, and drivers will be coming from the upper echelons of the executive user-chooser market.

'This is a car that drivers will choose to drive, it is not intended to compete in the mass market,' said James Daulton, Honda's head of corporate sales.

Hence the absence of a hatchback model from the new range, which Honda believes is associated too heavily with essential users and the mass fleet market, despite the five-door version of the current Accord accounting for about 60% of its sales. Drivers who need five doors or the flexibility of a hatchback will have to switch to the Accord estate, Civic or CRV if they are to stay with Honda.

Daulton believes the engineering heritage and 'discretion' associated with the Honda badge will appeal to the car's intended audience more than the openly thrusting and ambitious values associated with certain prestige marques, and he anticipates drivers gravitating towards the higher specification Executive and Type S models. For the benefit-in-kind tax conscious company car driver, the sales pitch will offer the Accord as a combination of Honda's famed engineering qualities, with performance and specification that rivals cannot match for the money.

The 2.0-litre petrol, for example, will be taxed at 18% of its P11d price, the same percentage applied to upper medium diesel rivals, while the 2.4-litre Type-S looks set to fall into the 25% tax band for the current financial year, representing the same tax charge as mid-business mileage drivers paid under the old company car tax system. In the longer term, Honda believes its new diesel engine (scheduled for January 2004) could account for up to 50% of sales.

In the meantime, the manufacturer is concentrating on getting the new car positioned on fleet choice lists and contract hire rate books. Already a darling of fleet maintenance departments for the reliability of its cars, Honda is promising service, maintenance and repair (SMR) costs of about £1,300 over three years and 60,000 miles, compared to a claimed £1,600-£1,700 for the new Accord's benchmarked rivals.

'We have made sure, for example, that the tyres look good but will not cost a fortune, and we think the Accord will have the lowest SMR costs in its class,' said Daulton. He added that Honda will release prices for the new car at the Motor Show in October, almost six months prior to launch, to enable contract hire companies to set lease rates well in time for drivers planning a car change next spring when the Accord goes on sale.

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