Tuesday, May 24, 2011

Is Honda Nuts? Its Japan-Only Fit Wagon Would be a U.S. Hit

By Jim Motavalli May 24, 2011

Honda’s management has just made half of a good decision. Taking a page from Toyota’s playbook, it is enlarging the “family” of the popular subcompact Fit hatchback. The new Fit Shuttle, to officially debut next March, stretches the 31-mpg combined base car into a minivan/wagon, which is basically what Toyota did with the larger Prius V. But Toyota is selling the hybrid V in the U.S. and so far Honda has no such plans for the Shuttle. Are they crazy? It’s a perfect car for the American market.

Outdated thinking?
Honda’s thinking on withholding the Shuttle is probably historical, but it’s also probably outdated. What you might call mini-minivans are huge hits in Honda’s domestic market and in Europe, but have often flopped in the U.S. The Kia Rondo, discontinued after the 2010 model year, comes to mind. But the Rondo — which touted three rows of seats in a mini wheelbase, was trying to do too many things at once. It started out strong with 28,000 sold in 2008, but sales fell to half that in 2009.

Kia’s sales drop also make sense when you realize that larger SUV sales rebounded in 2009 when the $4 gas of 2008 went away. The Rondo was cramped, especially that third row. But now gas is up again and the roomy, five-passenger Shuttle could slot nicely into Honda’s lineup, especially if more weight doesn’t hurt fuel economy too much. According to Jack Nerad, an executive analyst at Kelley Blue Book:

In the present climate, the Shuttle could do very well. But it will depend on whether high gas prices turn out to be an era, or just a blip. If it’s an era, then in all likelihood the car could sell in significant numbers.

Trying to track future gas prices is like grabbing o to an eel, but if I were in Honda’s management suites I wouldn’t be banking on a sustained return to $2.50 or $3 gas — though there could be some decline during the summer.

The number one seller in Japan
The Fit is a huge deal in Japan, where with the hybrid version (also not available here) it has been the number one seller for 20 months (having dethroned the hybrid Prius, and offering similar fuel economy). And it’s no slouch in the U.S., either — on the strength of high gas prices, April sales (8,116) of the subcompact were up 72.7 percent in the U.S. compared to the same month in 2010.

Another Fit would be a welcome addition to the American lineup. The base car has found a market because it offers a C-segment interior in a B-segment body, with 50.7 cubic feet of storage space if you tuck the back seat under the fronts (one of five possible configurations).

There’s a new website up for the Shuttle (in Japanese), but it doesn’t say much beyond that the new car will have “a roomy interior and ample luggage space.” Given the exterior photos, the revised interior layout probably adds a bit of both.

Too many hybrids
For Japan, Honda will also make a hybrid Shuttle, and there things get a bit trickier. As Nerad points out, Honda has struggled finding a coherent hybrid strategy. The Insight lacks distinctiveness compared to the much better-selling Prius. The perennial also-ran and somewhat bland Civic Hybrid has been completely redesigned for 2012 as part of a much-needed overhaul of the Civic family. So throwing the Shuttle into that mix might mean too many hybrid offerings for the company’s American dealers.

Honda isn’t talking about its Shuttle intentions. According to spokesman Chris Naughton:

We don’t discuss future product, but we’re always looking at our international markets to determine what might be a good fit for the U.S.

A good fit, Chris, is more Fits! But we are, in fact, getting the Fit EV, a 100-mile electric, in calendar year 2012. Details of that program are lacking, though a small number of cars are going into California test fleets at Google, Stanford University and the City of Torrance. Honda needs to get more high-profile with this program if it wants to ensure success. It should be talking to charging partners, discussing markets, and more. The company seems to be more enthused about its FCX Clarity fuel-cell car, which goes into production in 2015.

I wouldn’t suggest that Honda should be seeing a goldmine in either hybrid or electric Fits, but the Shuttle is a gas price-driven home run for American showrooms. Fuel economy + utility = hit in 2011.


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