Honda Looks To Ride North American Momentum With The New Civic

by Trefis Team
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Honda Motors (NYSE:HMC) hopes to carry its North American sales momentum into 2013 with the help of the redesigned Civic, which will be unveiled at the upcoming Los Angeles auto show. Civic is the best selling small car in the U.S. this year and Honda has sold 39% more Civics through October with sales crossing 250,000 units through October. [1]

This is in spite of the fact that the current Civic, which debuted a year ago, didn’t really live up to its expectations. The current Civic was criticized for its uninspired styling and average performance. Sales are partially up because of higher production levels this year as well since the automaker’s production last year was constrained due to inventory shortages caused by the tragic Japanese earthquake and Thai floods. [2]

See our complete analysis for Honda stock here

North America Is Honda’s Biggest Market

The refreshed model comes packaged with a 1.8 litre i-VTEC engine that generates a power of 141 bhp. The rest of the details including pricing will be made available on November 28 at the L.A. auto show and sales will begin soon after the official launch.

North America is the Japanese automaker’s biggest market, accounting for about 40% of the total unit sales. Keeping the sales up in the region has become all the more important since it is still not known how much longer the sales of the Japanese automakers in China will be impacted due to a wave of anti-Japanese sentiment arising in the country over claims on the disputed islands. Honda’s Chinese sales were down 53.5% in October.

Overall, Honda’s sales in the U.S. are up 22.5%  to 1.2 million through October helped by model refreshments of CR-V, Accord and higher production levels. The automaker expects the vehicle sales for the full year to rise by 25% as sales in October were affected by Hurricane Sandy and the remaining two months should boost the volumes with things now getting back to normal. [3]

Our price estimate of $36 for Honda’s stock is around 10% above the current market price.

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Notes:
  1. U.S. Auto Sales, wsj.com []
  2. Honda to Nissan Extend China Sales Plunge on Islands Dispute, November 2, 2012, bloomberg.com []
  3. Honda Still Expects 25% 2012 U.S. Sales Gain After Sandy, November 20, 2012, bloomberg.com []
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