Honda Motors (NYSE:HMC) is looking to dethrone Toyota in the mid-size sedan segment with its new Accord 2013, which it will start manufacturing in its plant in Marysville, Ohio, from September 3. The mid-size sedan is the biggest segment in the U.S. as 26% of the total vehicles sold belong to this category. This segment has traditionally been dominated by Honda and Toyota Motors (NYSE:TM) but others such as Nissan, General Motors (NYSE:GM), Ford Motors (NYSE:F), Volkswagen and Hyundai are catching up. Camry is the highest selling mid-size sedan in the U.S. in 2012, so far, with Accord in the second place.
To avoid building excess inventory levels of its current Accord, the automaker has turned to a stair-step program, which rewards auto deals on meeting or exceeding the monthly targets.  Honda has rebounded strongly in 2012 as it sold 19% more vehicles in the first seven months of the year as sales in the previous year were hurt by production and supply chain constraints caused by natural disasters.  The automaker is looking to ramp up production in North America as it faces margin erosion caused by a strong Yen.
- Where We Expect Honda’s Growth To Come From
- How Honda’s Valuation Depends On Different R&D Projections
- Earnings Review: Appreciating Yen And Higher Tax Expenses Eat Into Honda’s Profits
- Honda Earnings Preview: Strong North America Performance Likely Offset By FX Headwinds
- How Will The Yen Impact Honda’s Profits Going Forward?
- Which Geographies Have Been Driving Honda’s Automotive Revenue?
Not So Easy Anymore
The last few years has seen a greater demand for compacts and fuel efficient sedans as gas prices continue to remain stubbornly high. Thus, getting a high mileage remains one of the priorities for automakers. Nissan’s Altima has an impressive mileage of 38 mpg on the highway. Chevrolet’s Malibu 2013 has generally received positive reviews from auto critics and claims a mileage of as high as 37 mpg.  Ford is ready to launch its new Fusion 2013 in fall and Volkswagen Passat is priced lower than the competition. So, in short, competition in this category is immense.
Honda was quoted as saying that the price of the new Accord 2013 will be similar to the current Accord. Although the official figures of its fuel efficiency aren’t out, Honda claims the new Accord will be more fuel efficient than the current version and closer to Altima’s 38 mpg. 
We have a price estimate of $41 for Honda Motors, which is around 20% above the current market price.Notes:
- Vehicle Sales Seen Buoyed In U.S. As Bonus Incentives Grow: Cars, August 31, 2012, bloomberg.com [↩]
- U.S. Auto Sales [↩]
- Honda looks to silence critics with new Accord, August 20, 2012, profit.ndtv.com [↩]
- Honda revamps Accord for 2013 to keep up with changing market, August 30, 2012, chronicle.augusta.com [↩]