http://www.azcentral.com/business/articles/0325hondacivic25-ON.html
Sales of Honda Civics slip as customizers move on
Sholnn Freeman
Wall Street Journal
Mar. 25, 2004 10:36 AM
For 20 years, the Honda Civic was the favorite ride of young, California car enthusiasts like Anthony Luna. But not anymore, and that's a problem for Honda Motor Co.
Mr. Luna's tricked-out Honda Civic has won him ribbons and trophies, free goodies from dealers and lots of attention. But Mr. Luna, a 22-year-old computer technician in Ceres, Calif., replaced his Civic in November with a more powerful Nissan 240 SX from 1992. "I outgrew it," he says of the Honda. "Most of the people are moving to all the different brands."
Beginning in the early 1980s, Civics, often used ones, were highly prized among young car customizers - or "tuners" - like Mr. Luna. Souping up their cars with chrome wheels and high-performance engine and suspension parts, the tuners are a small part of the U.S. car-buying public. But they helped keep the Civic hip, which allowed Honda to sustain strong Civic sales without factory-to-consumer discounts. Now, Civic sales have been slowing, and signs that Honda is losing its status among young drivers are stirring Honda's conservative product planners to act.
Tom Elliott, Honda executive vice president of U.S. operations, says the Japanese company plans to introduce a new car next year to counter a growing number of rivals in the tuners' segment of the market. This new car would join the boxy Honda Element compact SUV, launched in 2002. The Element has outperformed Honda's sales expectations - but largely because it has been a hit with baby boomers. "The Civic, the Element - none of these are our last efforts at trying to attract younger buyers," says Mr. Elliott.
Mr. Elliott didn't offer many details, but he said the new car will likely be priced below the Civic, which starts just under $15,000. The new car will give Honda a vehicle to battle the rise of Toyota Motor Corp.'s Scion youth-car brand, which it plans to expand nationally this year. "There's no question that competition in that segment is getting stronger and more numerous," Mr. Elliott says.
For Honda, rejuvenating the image of the Civic is a critical challenge. The Civic is Honda's second-best-selling model in the U.S. (the Accord is Honda's No. 1 U.S. seller), with annual sales of about 300,000. The Civic is the first Honda many customers buy. But Civic's U.S. sales fell 4.3 percent last year, underperforming the overall U.S. small-car segment, which declined just 2.8 percent compared with the prior year. And data compiled by J.D. Power & Associates's PIN Information Network show that 20 percent of Civic buyers were 25 years old or younger last year, down from 26 percent in 1998.
In a rare concession to sales weakness, Honda recently began offering $400 factory-to-dealer discounts on the Civic. Honda's average rebate per Civic in February was $1,403, compared with $971 a year ago, according to Autodata Corp. That's still far below the $2,906 industry average for the month.
For years, Honda kept a hands-off attitude to the Civic customizing craze, generally avoiding a direct marketing appeal to young enthusiasts, a group sometimes referred to in the industry as "the fast and furious," after a movie with that title that celebrated the import-car street-racing culture.
In 2001, Honda redesigned the Civic and made it more family-friendly and sedate, which in turn left the tuners feeling slighted. Last summer, at an import-racing event in Irwindale, Calif., the crowd booed when the announcer mentioned Honda.
"We got turned off to Honda because they are not interested in their youth market," says Edgar Aguilar, a 23-year-old student in Modesto, Calif., who joined in the booing.
"They're taking steps backward instead of forward," says Mr. Aguilar, who replaced his Acura Integra GSR with a Subaru WRX. "Every Honda and Acura owner is ready to get out of their Hondas and into something else."
One big problem for Honda is that there are many more alternatives for disillusioned Civic enthusiasts than in the past. A big winner at Honda's expense has been Fuji Heavy Industries Ltd.'s Subaru. Young buyers who want power can chose the WRX, which has a cult following from videogames and European rally racing. To meet demand, Subaru has doubled production of the super-fast, 300-horsepower STi version of the WRX.
Nissan Motor Co. and Toyota also are offering sportier versions of their entry-level cars, the Nissan Sentra and the Toyota Corolla. The rise of drift-racing, in which participants slide cars sideways around sharp turns, has led some tuners to adopt 10-year-old rear-wheel-drive models from Nissan in place of Civics.
Detroit's Big Three are moving in on the Civic, too. DaimlerChrysler AG's Dodge Division now offers a 230-horsepower SRT-4 Neon. General Motors Corp. is planning a tuner-friendly version of its upcoming Cobalt small car.
Ford Motor Co. continues to dabble in the market with the Focus. Last year, Ford offered a souped-up Focus through its Specialty Vehicle Team (SVT) brand. While that model is scheduled to be phased out, Ford is looking at other options for offering higher-performance Focus models.
The threat to Honda's Civic from Toyota's Scion, which launched its first two models in California last year, will intensify this year when the brand expands nationally with a sporty hatchback called the tC.
It's enough to make a Honda dealer nostalgic. When the Civic was a tuner's car of choice, "other auto makers were envious," says David Conant, a big Honda dealer in Southern California. Now, he says, "they've got their toe in the door, and they are going to kick it wide open."
Sales of Honda Civics slip as customizers move on
Sholnn Freeman
Wall Street Journal
Mar. 25, 2004 10:36 AM
For 20 years, the Honda Civic was the favorite ride of young, California car enthusiasts like Anthony Luna. But not anymore, and that's a problem for Honda Motor Co.
Mr. Luna's tricked-out Honda Civic has won him ribbons and trophies, free goodies from dealers and lots of attention. But Mr. Luna, a 22-year-old computer technician in Ceres, Calif., replaced his Civic in November with a more powerful Nissan 240 SX from 1992. "I outgrew it," he says of the Honda. "Most of the people are moving to all the different brands."
Beginning in the early 1980s, Civics, often used ones, were highly prized among young car customizers - or "tuners" - like Mr. Luna. Souping up their cars with chrome wheels and high-performance engine and suspension parts, the tuners are a small part of the U.S. car-buying public. But they helped keep the Civic hip, which allowed Honda to sustain strong Civic sales without factory-to-consumer discounts. Now, Civic sales have been slowing, and signs that Honda is losing its status among young drivers are stirring Honda's conservative product planners to act.
Tom Elliott, Honda executive vice president of U.S. operations, says the Japanese company plans to introduce a new car next year to counter a growing number of rivals in the tuners' segment of the market. This new car would join the boxy Honda Element compact SUV, launched in 2002. The Element has outperformed Honda's sales expectations - but largely because it has been a hit with baby boomers. "The Civic, the Element - none of these are our last efforts at trying to attract younger buyers," says Mr. Elliott.
Mr. Elliott didn't offer many details, but he said the new car will likely be priced below the Civic, which starts just under $15,000. The new car will give Honda a vehicle to battle the rise of Toyota Motor Corp.'s Scion youth-car brand, which it plans to expand nationally this year. "There's no question that competition in that segment is getting stronger and more numerous," Mr. Elliott says.
For Honda, rejuvenating the image of the Civic is a critical challenge. The Civic is Honda's second-best-selling model in the U.S. (the Accord is Honda's No. 1 U.S. seller), with annual sales of about 300,000. The Civic is the first Honda many customers buy. But Civic's U.S. sales fell 4.3 percent last year, underperforming the overall U.S. small-car segment, which declined just 2.8 percent compared with the prior year. And data compiled by J.D. Power & Associates's PIN Information Network show that 20 percent of Civic buyers were 25 years old or younger last year, down from 26 percent in 1998.
In a rare concession to sales weakness, Honda recently began offering $400 factory-to-dealer discounts on the Civic. Honda's average rebate per Civic in February was $1,403, compared with $971 a year ago, according to Autodata Corp. That's still far below the $2,906 industry average for the month.
For years, Honda kept a hands-off attitude to the Civic customizing craze, generally avoiding a direct marketing appeal to young enthusiasts, a group sometimes referred to in the industry as "the fast and furious," after a movie with that title that celebrated the import-car street-racing culture.
In 2001, Honda redesigned the Civic and made it more family-friendly and sedate, which in turn left the tuners feeling slighted. Last summer, at an import-racing event in Irwindale, Calif., the crowd booed when the announcer mentioned Honda.
"We got turned off to Honda because they are not interested in their youth market," says Edgar Aguilar, a 23-year-old student in Modesto, Calif., who joined in the booing.
"They're taking steps backward instead of forward," says Mr. Aguilar, who replaced his Acura Integra GSR with a Subaru WRX. "Every Honda and Acura owner is ready to get out of their Hondas and into something else."
One big problem for Honda is that there are many more alternatives for disillusioned Civic enthusiasts than in the past. A big winner at Honda's expense has been Fuji Heavy Industries Ltd.'s Subaru. Young buyers who want power can chose the WRX, which has a cult following from videogames and European rally racing. To meet demand, Subaru has doubled production of the super-fast, 300-horsepower STi version of the WRX.
Nissan Motor Co. and Toyota also are offering sportier versions of their entry-level cars, the Nissan Sentra and the Toyota Corolla. The rise of drift-racing, in which participants slide cars sideways around sharp turns, has led some tuners to adopt 10-year-old rear-wheel-drive models from Nissan in place of Civics.
Detroit's Big Three are moving in on the Civic, too. DaimlerChrysler AG's Dodge Division now offers a 230-horsepower SRT-4 Neon. General Motors Corp. is planning a tuner-friendly version of its upcoming Cobalt small car.
Ford Motor Co. continues to dabble in the market with the Focus. Last year, Ford offered a souped-up Focus through its Specialty Vehicle Team (SVT) brand. While that model is scheduled to be phased out, Ford is looking at other options for offering higher-performance Focus models.
The threat to Honda's Civic from Toyota's Scion, which launched its first two models in California last year, will intensify this year when the brand expands nationally with a sporty hatchback called the tC.
It's enough to make a Honda dealer nostalgic. When the Civic was a tuner's car of choice, "other auto makers were envious," says David Conant, a big Honda dealer in Southern California. Now, he says, "they've got their toe in the door, and they are going to kick it wide open."
