Why Honda Is Gaining Market Share In 2017

-10.93%
Downside
36.43
Market
32.45
Trefis
HMC: Honda Motor logo
HMC
Honda Motor

Honda Motor Co. (NYSE: HMC) is one of the few companies to have grown its sales in the U.S. auto market in 2017. Overall new vehicle sales so far have declined by 1.5% over the first two months of the year with car sales declining by as much as 12.1%. This makes it all the more surprising that Honda has grown its sales by almost 6% compared to its sales in the first two months of 2016. Between them, Honda’s two best selling passenger cars, Accord and Civic, comprise about 45% of the company’s total sales. Both these models have seen their sales decline by more 7.5% so far this year. Despite this, the Japanese auto maker has grown its market share by 10 basis points in 2017.

A closer look at the top five selling vehicles of the company reveals how the company managed to do this:

hmc 17

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In 2017, truck sales in the U.S. car market have grown by 6.4%. Currently, this segment comprises more than 60% of overall vehicle sales in the U.S. auto market and Honda’s CR-V has been the highest selling SUV for many months now. In 2016, the growth of CR-V sales got capped at around 3.4% as a result of production constraints. However, spurred by the 95.5% growth of the smaller SUV HR-V the company increased production of CR-V and its sales in 2017 have grown by 37.6%. The growth rate for HR-V has fallen to 32.1% but it is still a very strong figure.

In contrast to Honda, Ford and Toyota have seen their sales decline in 2017, while GM’s sales have grown by a modest 0.4%. This shows that the company’s strategy of concentrating on product quality and careful customer targeting is working well, instead of chasing volume growth and market share in the short term like its competitors.

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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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