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MarketScreener Homepage  >  Equities  >  Tokyo Stock Exchange  >  Honda Motor Co., Ltd.    7267   JP3854600008

HONDA MOTOR CO., LTD.

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Honda makes a U-turn to catch U.S. truck, SUV trend

10/09/2020 | 06:27am EST
An undated handout photo shows the 2021 Honda Ridgeline

DETROIT (Reuters) - Honda Motor Co is redesigning the looks and the marketing for its sport utility vehicles and trucks to appeal to U.S. consumers who are paying premiums for rival automakers' vehicles that offer a more rugged, off-road adventure image.

Since the 1970s, Honda has been synonymous in the United States with understated, well-engineered and highly efficient cars such as the Honda Civic and Accord. Honda's SUVs, minivans and its Ridgeline pickup truck are built on the smooth-handling chassis of those sedans.

But over the past five years, U.S. consumers have shifted toward larger vehicles with all-wheel drive, beefed-up suspensions, big grilles and body armor designed for plowing over desert paths and mountain trails - though most such vehicles never leave pavement.

Ford Motor Co's new Bronco sport utility and its F-150 Raptor model are chasing this trend. Fiat Chrysler Automobiles NV is expanding its Jeep brand to harvest more profit from a segment it dominates.

More than 70% of vehicles sold in the United States last year were midsize trucks and SUVs, while 53% of Hondas sold fit those categories. Honda does not sell a large pickup that competes with the Ford F-150, and is therefore shut out of one of the U.S. market's most profitable segments.

"We are not on trend with the rest of the industry," Jay Joseph, Honda's U.S. automobile marketing vice president, said during a conference call.

Honda on Thursday unveiled a new look for its midsize Ridgeline pickup, giving the vehicle a bigger grille and other off-road cues. A new advertising campaign launching on Friday shows the Ridgeline hauling dirt bikes and charging down unpaved roads in the Rocky Mountains. Former wrestler John Cena gives the ads a "tough guy" voice.

Honda is hoping the new approach will boost Ridgeline sales to 50,000 trucks a year from about 33,000 in 2019, Joseph said.

The automaker has forecast a 68% decline in global operating profit for the current fiscal year that ends March 31, mainly due to the sales lost to the pandemic.

Honda's Passport midsized SUV will be one of the next models to get the off-road makeover, Joseph said. The five-seat Passport is outsold nearly seven to one in the United States by the Jeep Grand Cherokee, according to sales data compiled by Automotive News.

(Reporting by Joe White in Detroit; Editing by Matthew Lewis)

By Joseph White


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
FIAT CHRYSLER AUTOMOBILES N.V. -0.73% 13.088 Delayed Quote.-0.08%
FORD MOTOR COMPANY -3.92% 9.08 Delayed Quote.-2.37%
HONDA MOTOR CO., LTD. -2.00% 2996 End-of-day quote.-3.32%
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Financials
Sales 2021 12 747 B 122 B 122 B
Net income 2021 341 B 3 277 M 3 277 M
Net Debt 2021 4 685 B 44 965 M 44 965 M
P/E ratio 2021 15,6x
Yield 2021 1,98%
Capitalization 5 175 B 49 630 M 49 664 M
EV / Sales 2021 0,77x
EV / Sales 2022 0,70x
Nbr of Employees 36 313
Free-Float 91,2%
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Mean consensus BUY
Number of Analysts 19
Average target price 3 484,38 JPY
Last Close Price 2 996,00 JPY
Spread / Highest target 43,5%
Spread / Average Target 16,3%
Spread / Lowest Target -16,6%
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Managers
NameTitle
Takahiro Hachigo President, CEO, Representative Director, Head-R&D
Toshiaki Mikoshiba Chairman & Head-External Affairs
Seiji Kuraishi COO, Representative Director, VP & GM-Automobile
Kohei Takeuchi Senior MD, Head-Finance & Administration
Yusuke Hori Executive Officer & GM-Information Technology
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