Why Honda Is Positioned To Have An Excellent 2017 In The U.S. Auto Market

-13.05%
Downside
37.32
Market
32.45
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HMC: Honda Motor logo
HMC
Honda Motor

Honda Motor Co. (NYSE: HMC) has been the outlier to a number of trends in the U.S. auto market in the year 2016.

The first of these is that the company has experienced growth in a segment in which it is typically not renowned. The Japanese auto maker has traditionally been considered as the manufacturer and distributor of two of the best selling sedans: Civic and Accord.  But the proportion of its overall vehicle sales in the market has now tilted even more strongly in favor of light trucks, which includes SUVs, Crossovers, minivans and pick-up trucks. The ratio of light trucks to passenger vehicles has shifted from 55% to 45% in 2015 to 59% to 41% in 2016. The company is now planning to expand production of SUVs in the U.S. going forward from 2017.

The second is that the company has seen its sales grow in 2016, while sales of almost all major auto makers have declined in 2016. If one combines the sales of GM, Ford, Toyota and Honda, overall unit sales in 2016 have declined by close to 1%. However, Honda has seen its sales grow by 2.9% in the January-November period.

hmc trend

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The third and most surprising of these trends is that even though SUVs have now become dominant in Honda’s sales mix, its overall sales growth could not have happened without the 11% increase in sales of the sedan Civic. In a year in which passenger car sales have declined by 8.4% so far, achieving a close to 11% increase in unit sales is a remarkable feat which shows Honda’s strength in its dominant segment. Combined with its growing popularity in the SUV market, these factors bode well for the company in 2017.    The CR-V is now the highest selling SUV in the U.S. and the HR-V one of the fastest growing subcompact crossovers in the market.

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com

2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Honda Motor

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