Honda has made a quick U-turn.
Just 19 months after its Civic compact hit showrooms and was slammed by critics, the company has revamped the car, giving it a sportier look and upgrading the interior.
It's an unusual and costly do-over. But Honda — among the auto industry's most highly-regarded brands — was worried the car's flaws would hurt sales and market share, analysts say.
The 2013 version goes on sale Thursday, and Honda has given it a sportier profile, replaced its chintzy dashboard and made the ride quieter. The revamp comes to market in about half the time it normally takes, and shows just how concerned Honda is about falling behind rivals.
"The new consumer coming to the marketplace looking for a compact car doesn't think the Civic is a slam-dunk anymore," says Jesse Toprak, vice president of market intelligence for the TrueCar.com auto pricing website.
The company misjudged the small-car market when it rolled out the Civic in April of last year, analysts say. Small-car buyers used to tolerate cheap materials, noisy interiors, and boxy styling just to get high gas mileage. But they now expect their gas-sippers to have a quiet ride, crisp handling and plush seating. The 2012 Civic lacked those refinements.
It was so noisy, for example, that "I kept trying to put the windows up," recalls IHS Automotive analyst Rebecca Lindland, who says that competition caught Honda off-guard.
To be sure, criticism of the 2012 Civic hasn't dented demand. Sales of the car have risen to 255,000 through October, up 39 percent from last year. The car has passed the aging Toyota Corolla and the Chevrolet Cruze to become the nation's top-selling compact.
But the increase came mainly because Civics were in short supply last year following an earthquake in Japan. Loyal customers delayed purchases until the Civic returned, Toprak said. The Civic also is selling well because of discounts, he says. Dealers are knocking about $2,500 off the sticker price to clear out 2012 models. Civic discounts usually run about $500.
Without changes to the car, Honda probably would keep longtime customers, but it wouldn't attract new ones. "They will eventually start bleeding market share," Toprak says.
When Honda began to develop the 2012 Civic years earlier, competitors still were putting out blasé compacts aimed at budget-conscious buyers. But as gas prices rose, consumers shifted to smaller vehicles. At the same time, companies like Hyundai rolled out sleek, quiet compacts with amenities once reserved for the luxury class.
Shortly after the 2012 Civic went on sale, in the spring of 2011, the influential magazine Consumer Reports refused to give it a coveted "Recommended Buy." The magazine's chief auto tester said that the car was a step backward, and it appeared Honda tried to save money by using cheaper parts.
Company executives get prickly when asked if criticism was the reason they moved so fast to update the Civic. They'll say only that they wanted to keep the car ahead of the competition.
"We're not reacting to negative criticisms," says Art St. Cyr, Honda's chief product planner in the U.S. He says that Honda started revamping the Civic even before the 2012 model came out. "We weren't embarrassed. We weren't trying to make excuses for what we were doing." Yet Honda did something startling with the 2013 model. Instead of making a few cosmetic changes that normally come in the middle of a car's life, the company did an overhaul. It added insulation to cut engine noise, put in thicker glass to reduce wind, and made the brakes larger to stop the car faster. The seat material was upgraded, and Honda added a softer dashboard with two colors. Outside, the car got it a more aerodynamic look with a new hood, trunk lid and lights.
The improvements are so vast that Honda must have started working on them even before the 2012 went on sale, Lindland says. That's before the criticism came from Consumer Reports and others.
Lindland, who drove the 2013 Civic in advance of its Thursday debut at the Los Angeles Auto Show, says it's far better than the 2012. "I was really impressed with how quiet it was," she says. "It's just a more refined and more elegant small car." Toprak says the new Civic looks like an expensive luxury car, especially when compared with its predecessor.
The revamp is costing about $500 per car, Honda estimates. Toprak says the spending was necessary to attract new buyers. Many people who would have bought larger cars are now looking at compacts because they're in fashion, he says.
Compact car sales now account for 14.6 percent of the U.S. market, up 2.2 percentage points from just five years ago, according to Ward's AutoInfoBank.
Honda will get part of the revamping cost back by raising the base price of the Civic LX by $160 to $18,965 with an automatic transmission. But the company eliminated the stripped-down DX version, which started at just over $17,000 with automatic.
The quick do-over puts the Civic back among the top cars in its segment, says Lindland. But it doesn't mean that all automakers will upgrade their cars every 19 months.
"It's expensive to do these," she says. "I wouldn't say this is a trend — yet."
Honda has made a quick U-turn.
Cherry Capital totals on the rise
New statistics show business took off at Cherry Capital Airport this spring. Both passenger numbers and fight totals rocketed skyward.Continued ...
SOS seeks to redefine education
Genna Mang dreams of being a special education teacher. She’s 16, bright, soft-spoken and loves animals. She learns differently, though, than most other kids.Continued ...
Downtown Kalkaska construction to start in Aug.
Kalkaska will soon be under construction as the village redesigns two blocks of Cedar Street, the four-lane road where drivers on M-72, M-66 and U.S. 131 roll through downtown.Continued ...
Kalkaska streetlights repurposed
The existing downtown Kalkaska won’t be lost forever once machines roll in to update the commercial district.Continued ...
Fred Goldenberg: Longevity economy drives growth
Current rhetoric on Capitol Hill and in the media contends there are too many “old” people, that we are a financial drain on society and, unless there are massive cuts and changes to our so-called entitlement programs (i.e. Social Security and Medicare), we will drag the country into ruins.Continued ...
- Friday, July 18, 2014
Futures File: Downed jet prompts increase in commodities
The crash of the Malaysia Airlines flight in Eastern Ukraine killed all 298 people aboard. Initial fears that the plane had been shot down were supported by intelligence agencies, sparking concerns the crash could signal a deepening of the conflict between Ukraine and pro-Russian separatists.Continued ...
Ag Forum: Signs, signs, understanding signs
“I don’t know what that sign means, but I like it.” This is the common feedback Michigan Agriculture Environmental Assurance Program (MAEAP) technicians receive from local wineries.Continued ...
- Thursday, July 17, 2014
The Record: 07/18/2014
Assumed names filed in Grand Traverse County:Continued ...
Building Permits: 07/18/2014
Building permits issued in Grand Traverse County:Continued ...
Rejected Fox bid for Time Warner shows growth mood
In a move that aims to counter consolidation among TV distributors, Rupert Murdoch's Fox has made an unsolicited takeover offer for rival media giant Time Warner for about $76 billion in cash and stock.Continued ...
- Wednesday, July 16, 2014
New pool and spa business open on South Airport
Jason Shepard has seen just about everything there is to see in the pool business.Continued ...
Two Men and a Truck hiring to meet growth
Two Men and a Truck needs far more than two men these days. The franchise moving company on West Silver Lake Road said sales rose 53 percent this June compared to June 2013, representing what co-owner Mara Crofoot said is a rebounding northern Michigan real estate market.Continued ...
Beverly Fields: Marketing and the Prime Time Woman
There is a “sweet spot” in the market, but the majority of businesses are ignoring her.Continued ...
Fred Goldenberg: Political polarization — the American reality continues
The Pew Research Center recently released a report on political polarization in America.Continued ...
Business Memoranda: 07/16/2014
Deborah Poncar joined Jay Zelenock Law Firm PLC as a paralegal. Poncar has worked in the legal field for more than five years.Continued ...
Business in Brief: 07/16/2014
Personal Property Tax presentation; Veterans appreciation; Starting a business workshop. (Plus more)Continued ...
- Tuesday, July 15, 2014
Glenn Puit: Badger keeps moving forward
The props on the S.S. Badger spun just beneath the surface of Ludington's harbor, and churned a light brown, sandy, cloudy mix into the water.Continued ...
Sweet Spoonful: Tracey Scheifele conducts business In Great Taste
The spoons on Tracey Scheifele’s necklace are more than just jewelry. Each one represents a store that sells her hot fudge, marking another small bit of business success.Continued ...
Credit unions: Business loan demand jumps
Michigan credit unions say they've witnessed a significant spike in demand for business loans, particularly from smaller enterprises.Continued ...
Putter customizes to different strokes for different folks
Ken Dean doesn’t like to conform to his golf clubs. “I found that I was adjusting to the putter all the time. The putter was telling me how to stand and the putter was telling me how to grip,” Dean said. “I don’t want this thing doing that. I want the putter just to be there when I address the ball.”Continued ...
- Monday, July 14, 2014
Panera slated to open in fall
A Panera Bread is rising in the hot business climate on U.S. 31, but it will be months before the cafe starts making dough.Continued ...
- Sunday, July 13, 2014
Economic leaders look to harvest agritourism in region
The email arrived in Susan Odom’s inbox on June 16 at 7:34 a.m. Dina Ferree’s message was straight-forward and brief. Ferree and her boyfriend, Roger Fink, of Indiana, planned a camping trip to a state park in the Traverse City area during the National Cherry Festival and, during their journey, they wanted to visit a real northern Michigan farm.Continued ...
Right Brain design nominated
Right Brain Brewery is homing in on an award that will put its label in front of a unique corner of the beer market – beer can collectors.Continued ...
Doug Luciani: Family, health issues crucial to success
The impact of important personal and family issues including child care, early education and healthcare on the business world is often focused on the short-term bottom line – health insurance costs increase by this or that percent, businesses spend X-amount on child care, and so on.Continued ...
- Saturday, July 12, 2014
Ag Forum: Too many accolades — no way!
If you’re anything like I used to be, your eyes roll every time you hear of yet another “best of” accolade for the Grand Traverse region.Continued ...
- Cherry Capital totals on the rise