If the alarm bells have not yet begun to clatter inside Honda Motor, then it's time.
Last week Honda said its automotive operations lost nearly $1 billion, with net profit from April to June coming in at a paltry $394 million (all figures in U.S. dollars). Not good, but understandable given the earthquake and tsunami devastation the company has been dealing with since March.
Honda has not been able to build nearly as many cars as it could sell due to huge parts shortages. Honda's suppliers are mostly back in the game and Honda's production lines are ramping up substantially.
And then early this week came the big, shocking slap: Consumer Reports, the influential magazine, is not recommending the all-new 2012 Civic LX compact. The redesigned Civic just didn't pass muster in CR's road test.
"While other models like the Hyundai Elantra have gotten better after being redesigned, the Civic has dropped so much that it now ranks near the bottom of its category," said David Champion, senior director of Consumer Reports' auto test center.
CR says the Civic LX's score dropped a "whopping" 17 points to a mediocre 61 from the previous generation's very good 78.
The good news for Honda is the new Civic did not finish dead last in CR's ratings of 12 small sedans. That honor fell to the redesigned and lower-priced Volkswagen Jetta. The 2012 Civic was ranked second to last, however, and the price of the base model remained unchanged, starting at $14,990.
"I'm sure its reliability is good," Champion said of the Civic, "but we're very disappointed with the way the car performs."
The CR testers did not like the Civic's choppy ride, its long stopping distances, the lack of adequate agility and all the road noise. This is a shocking indictment of the Civic, Canada's best-selling car for 13 straight years. Honda surely must be deeply troubled to see that the redesigned-for-2011 Hyundai Elantra tops CR's ratings "with its impressive fuel economy, roomy interior, and strong value."
The Civic, says CR, "has slid backward with its redesign."
Honda disagrees, of course. In a statement the automaker said, "In virtually every way, the completely redesigned 2012 Civic is a step forward. The new Civic excels in areas that matter to small-car customers, including fuel efficiency, safety, and reliability." Honda also pointed out that CR gave the Civic high marks for safety and noted the car has a long history of being reliable.
CR's criticisms have nothing to do with safety and reliability and they, in fact, point to an emerging pattern with Honda in general. Prior to the Civic, the last two Honda models tested by CR also did badly in road tests: the Honda CR-Z and Insight hybrids.
This, for the record, is a Civic redesign Honda says was delayed by about a year to make sure the car hit the sweet spot in the compact car class. So far, the sales story has not been pretty, however.
In June, Civic sales slid 10.2 per cent, while sales of the Elantra surged 50.2 per cent. On the year, Civic sales are down 2.0 per cent (to 26,371 through June), while Elantra sales are up a stunning 39.4 per cent (to 24,283).
It's possible the Elantra could overtake the Civic to become Canada's best-selling car this year. And it's possible but not likely Honda will be increasing production of the Civic now that the worst of the supply problems created by the earthquake calamity are behind the company. But we'll see. Globally, Honda's sales in the second quarter were down 27.4 per cent, while in Canada, Honda's sales were down 10.2 per cent through the first half of 2011.
To help turn things around, Honda is planning a fall re-launch of the 2012 Civic, though reintroducing buyers and testers to the car won't change road test scores unless the car itself changes substantially, too – and that's not likely to happen between now and September/October. So what's next for Honda? Quite a lot.
A new CR-V compact crossover is expected this winter, followed in the spring by a redesigned Accord. The Civic, CR-V and Accord represent about 70 per cent of Honda brand sales in North America.
If new versions of the CR-V and Accord perform as poorly in road tests as the Civic has done in the latest from CR, then the alarm bells inside Honda will go from loud to deafening.
