Civic has ‘ammunition’ to remain top compact

Bloomberg

Honda Motor Co.’s Civic, despite being stung by critical reviews and tight supply in the U.S. in 2011, rebounded to outsell its rivals so far this year and the carmaker has enough “ammunition” to hold onto the top spot, an executive said.

U.S. sales of Civic sedans and coupes rose 45 percent to 48,970 units in the year’s first two months, ahead of Toyota Motor Corp.’s Corolla, a perennial challenger, and General Motors Co.’s Cruze. After supply disruptions last year, Honda now has enough North American capacity to make Civic the top-selling compact, said Tetsuo Iwamura, Honda’s chief operating officer for North America.

“When competitors shoot at the Civic, we’ll have enough ammunition to shoot back,” Iwamura said in an interview this week at Honda’s U.S. headquarters in Torrance, California. “We don’t talk about No. 1 as a goal. We always think about having very good acceptance and high customer satisfaction.”

The car at the core of Honda’s U.S. business since 1973 hasn’t led compact sales since 2002. The Civic trailed both the Corolla and the Cruze last year, according to Autodata Corp., a New Jersey-based researcher. A year after the earthquake and tsunami damaged Honda’s parts supply base and engineering center in Japan, the carmaker has ratcheted up North American output of the model 69 percent to regain sales in the U.S., its biggest source of revenue.

Honda made 84,678 Civics at plants in Canada and Indiana in the first two months of the year, up from 50,056 in the same period a year ago. North America production of all Honda and Acura cars, as well as light trucks, jumped 36 percent to a record 301,564, according to the company.

Civic sales fell 15 percent last year to 221,235, the lowest level since 1992. Along with parts-related production delays, the 2012 Civic LX sedan failed to receive the “recommended” status its predecessors were awarded by Consumer Reports last August. The magazine faulted the car for a decline in interior quality, a choppier ride and road noise.

Higher U.S. gasoline prices are benefiting the Civic, and should buoy demand for at least another four months, said Jesse Toprak, industry analyst for TrueCar.com.

“It’s got a pretty good chance of being No. 1 this year, owing to availability and the price point,” said Toprak, who is based in California.

“They are a bit lucky that the fuel prices are rising now as the Civic continues to be viewed generally as more gas-efficient, and a safe choice.”

The average price for a gallon of regular unleaded gasoline has increased 16 percent this year to $3.81 as of Monday, according to AAA, the largest U.S. motorist group. The Civic coupe has a starting price of $15,605 while the sedan’s price starts at $15,805, according to researcher Edmunds.com.

The outlook for the Civic beyond July, when fuel prices may ease, will depend on model updates Honda plans to address amid criticisms and competing vehicles, including Hyundai Motor Co.’s Elantra, Toprak said.